Do I Need Gap Insurance in Chamblee, GA?
It’s a good question, and we hope that by the time you’ve finished reading, you'll be clear on whether GAP insurance is right for you. If you’re one of the many residents of Chamblee, Atlanta, Alpharetta and Gwinnett considering the purchase or lease of a new Honda from us at Curry Honda, keep scrolling to learn more!
What is GAP Insurance?
According to Car and Driver, GAP insurance, also called General Asset Protection insurance, provides coverage for the difference between what the car is worth and how much the driver still owes on their car loan or lease. While everyone is required to purchase automotive insurance, GAP insurance is not required but recommended. GAP insurance is helpful for when your car, truck or SUV is totaled but you still owe money on your car. Your insurance company will only cover what the vehicle was worth, not what you still owe, creating a gap in insurance that you’ll still have to cover. Take a look at the table below for an example.
Let's Look at the Numbers
Table from WalletHub’s “Gap Insurance Guide” article. Click for more details.
When Would GAP Insurance Apply to Me?
Not everyone needs GAP insurance. So how do you know when it’s best to purchase the extended insurance plan?
If you paid a low down payment and took out a large loan.
A small down payment will result in a larger loan, which will further increase the gap between what you owe on your model and the car’s depreciated value.
If your loan terms are fairly long.
According to Experian Automotive, the average car loan is now 72 months long, some even reaching upwards of 84 months. The more time that you have to pay off a loan, the longer that it will be for your loan payments to catch up to your vehicle’s depreciating value.
If you purchase other service plans or add-ons at signing.
Adding more fixtures to your loan like extended service agreements, debt from a previous auto loan or dealer-installed options will only increase what you owe on your model without actually increasing its value.
If you know your car will depreciate quickly.
The quicker your vehicle depreciates, the more likely that you’ll owe more on your model than it’s worth. Check out reliable sources like Edmunds and Kelley Blue Book® to research the estimated depreciation rate of the models that you want.
If your model has high mileage.
High mileage on a vehicle can speed up it’s depreciation, so if you’re driving more than 15,000 miles per year, you should consider purchasing GAP insurance.
If you leased your car.
Since lessees pay less on principal every month with their lease payment, many leases include GAP coverage automatically.
If you're interested in learning more about GAP Coverage or would like to purchase a new vehicle, contact us or stop by Curry Honda at 5525 Peachtree Industrial Blvd., Chamblee, GA 30341. As always, we look forward to serving our customers from Chamblee, Atlanta, Alpharetta and Gwinnett.
