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Do I really need gap ins in this scenario? DodgeJourney MSRP 23,540 for the model I an buying,my finance amount is going to be 22k due to some negative equity. Int rate @ 5%. Saleman told me I don't need it, since I am financing under MSRP. He said I am risking maybe 2k loss in first 6 months after that little risk since int rate is not that high. My insurance company is GEICO. Any thoughts or experience? Thanks.
You'll be under water by more than that after 6 months. The Journey's are selling for over 4K below MSRP, so in this case we can propose the vehicle you're looking at sells for around 19K on average, factor in depreciation, and you're 5K+ upside down within a year. Although I don't buy GAP, in this case it makes sense. But I'd get it through your insurance company instead of the dealership.
GAP thru dealer was $800.
Loan/Lease payoff thru Progressive costs me $17 a month and covers 25% of the actual cash value of the vehicle in case of a total loss.
So... if I owe $40k... and car is worth $32k and is totaled... my policy pays the $32k after my $500 deductible... then the loan lease payoff covers 25% of the $32k... which in this scenario is $8k and I'd break even.
Obviously once I am no longer underwater I drop it off my insurance policy. Either way it's a lot less than $800.
Gap was offered to me from the dealer for $799. NFCU offered it for $199. I passed on both. Its a gamble. If you buy no money down and or bring negitive equity and buy new cars it can make sence, but never at the money the dealer charges.
The price has gone up these days but 10 years ago when I was in the buisness most of the cars we sold the gap insurance cost us $99 and we sold it for $499. The price of the gap product to the dealer changed based on the loan terms but for 9 out of 10 the cost was $99. $400 back end profit with one extra signiture .
If anyone has already bought GAP or a ESC (extended warranty or service contract) most of them can be canceled and a prorated refund will be issued. So if you bought gap 3 months ago and are sick about the extra 500+ profit you gave the dealer, call the F/I department and cancel (if your contract alows that)
A lot of folks buy GAP that don't need it, in your case it is probably a good idea as Dodge Journey's depreciate pretty quickly. If you can get is for 200 bucks than probably not a bad deal, most dealers though use GAP as a chance to make some cash and mark up the cost by 2 to 4 times what they pay.
GEICO does not sell GAP insurance. i would be financing throgh Chrysler since that is my best option. Would you purchase through dealer if that is the only option for about $900 over 72 months(price I am currently paying on my KIA)? Are there any stand alone providers out there? Thanks for the input everyone.
Call your auto insurance company and get a quote for GAP. Every insurance company is less expensive than the dealership.
GEICO is my auto insurance company and does not offer GAP insurance
@Anonymous wrote:GEICO is my auto insurance company and does not offer GAP insurance
All good advice but in the end the decision should be the one you feel most comfortable with. Good advice buying GAP through your insurance company but since GEICO doesn't sell GAP and you feel you need it, then maybe you should consider buying it from the dealer. In the end if your car is a total loss, you're the one who is going to have to make up the difference on what you owe and what your insurance company pays. Consider asking what the replacement value of the car is through your insurance company. IMHO