Should I get GAP insurance?

[Anonymous]

Im purchasing a 2019 Rubicon this saturday.

I was able to negotiate pricing at about 9% below invoice pricing and I will be putting down something along 24-25% in down payment.

Gambling on 9% below invoice + 24% DP + low depreciation on Wranglers.....would GAP even be needed?

Basically MSRP for my jeep build would be ~52000 and my loan is only ~37200

Thanks all in advance!

[mmajer4211]

JEEP!!! Congrats! Love mine. As for the gap insurance I think you answered your own question. Gap covers if the vehicle is not worth the remainder of the loan. That Rubicon will be worth more than that original loan 2 years from now so I'm not sure I would worry about it.

[Anonymous]

Check with your insurance company to see if they offer Gap coverage. The last time I needed it, it was about $6/mo. Then I canceled it when no longer needed.

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[ridgebackpilot]

You can easily calculate whether you need GAP insurance. Just go to Edmunds or Cargurus and estimate the value of a similarly-equipped, one- or two-year-old Jeep Wrangler Rubicon. That figure is approximately what your insurance company would pay if your new Jeep is totaled after one or two years.

Then run a loan amortization table on your auto loan. That will tell you what your principal balance will be after one or two years.

If your principal balance owed on your auto loan is higher than the estimated value of your Jeep at any point, then you need GAP insurance. If not, then you don't need it.

In your case, even without running the numbers, I suspect you don't need GAP insurance. That's primarily because you're putting 24% down, which will make up for the significant depreciation suffered by a new car. If you weren't putting that much down, you might well need GAP insurance.

[Remember0]

I vote no GAP with a 20 percent DP unless you are planning on putting a Lot of miles on the car like 50k per year.

[Anonymous]

Quantum001,

I have to disagree, GAP is intended to cover the deficient balance of an auto loan that insurance doesn't pay. If you owe 25k on a loan and insurance gives you 25k, but it costs 35k to replace that vehicle, GAP doesn't cover that difference as you are implying. GAP does nothing, in regards to replacement cost of a totalled vehicle. GAP rider's will ONLY cover a deficiant balance on the loan if there is one (ie: owing 25k on loan and insurance pays 20k, GAP should cover difference plus deductible typically). GAP will not cover anymore than the loan balance owed minus the insurance ACV settlement.

[Anonymous]

Who is the loan with an how much is GAP?

I agree it should not be needed but for example my loan with DCU GAP is one time $299 and not only coveries a deficiency in the event of a total loss (Loan balance-what insurance pays) they cover my insurance deductible up to $1,000 and will give me $1,000 if I take a new loan with them within X days (forgot 30 or 60 or 90).

If on the fence with terms like that maybe I'd take it.  I have GAP on one my DCU car loans which definitely needs it the other used car refi has a 65% LTV so I didn't take it.

For me if I were on the fence and it was $299 with extra perks I might consider it.  If it's captive financing and $799 forget it.