Questions about GAP Insurance

[ando35]

Do I even need gap?

And if so, will the bank that is financing me force me to get it at signing?

Can I just wait till after I buy it to ensure the dealer has one less way to finagle money out of me?

[RSX]

I would get it

unfortunately I have had to use it twice in my lifetime

when I was 19, I bought a brand new car.  And was hit head on 2 weeks later (their fault, charged)

total write off. I would have lost approx $2k in 2 weeks, and wouldn’t have been able to replace it with the same model ( I was stretched to buy the model I got).  

May 2018 I bought a 2015 off a lease.  In Feb of this year the lithium battery smoldered and totaled the car.  That would have been a $5k loss at least.  Possibly more.   Instead I walked away without a car or any remaining payments. 

So I had motorbikes and Cars in  between where I paid for GAP and “lost” money. But overall I am ahead

also, if you pay the vehicle off early, you get a refund on the gap. I have done this 3 times. 

Plan for the worst, hope for the best

[Anonymous]

Gap is generally cheap enough $299 one time fee through my credit unions that it's a must if you will be upside down on the car. Few things hurt more than a car being stolen or totalled but you still owe thousands.

[Loquat]

@ando35 I would say that unless you're putting a substantial amount of money down and plan to either aggressively pay your vehicle off AND keep it in relatively nice condition then GAP is a must.  It's cheap enough and with the way cars depreciate you don't want to ever find yourself needing it and not having it.  

There are many things I would skip at the dealership but GAP isn't one of them and I'm a former F&I Manager that worked at a very large auto network here in the midwest.   Nothing worse than having to buy a new car while paying off the balance of another....and that's even if you can get approved for technically a second auto loan. 

GAP doesn't usually tend to cost more than $599 (if so, haggle with the F&I guy) and it'll be the best money you ever spend in the event of a total loss.  

[Anonymous]

The bank can't force you to buy GAP. I recommend it if:

• Your down payment will be less than 20% of your total loan.
• You drive more than 15,000 miles/year.
• Your loan amount is greater than the value of your car because you're financing your fees, taxes, negative equity/rollover balance from an older car loan, a vehicle service contract, or other items.
• You're buying a vehicle that is likely to depreciate more quickly than the average.
• Your loan term will be 60 months or longer.

As others have said, if you're getting your loan from a credit union, they often sell GAP at cost (around $300). 

[Gotham-]

GAP is at the dealership and it can be costly
You can also ask your own Ins company...

They also provide “Total Loss Coverage” also known as GAP so put a little call into your ins company for some TLC and don’t fall into the GAP (throwback slogan for the GAP clothing store 😆)