Still wondering about gap insurance? Read on.
Where do I buy gap insurance?
The best place to buy gap insurance is your current insurance provider or a stand-alone gap insurance company. Larger companies like AAA, Liberty Mutual, Nationwide, Travelers, and USAA offer gap insurance. Your dealership or lender may offer to sell you gap insurance when you buy a new vehicle, but this option typically costs more.
How much is gap insurance per month?
When you add gap insurance to an existing auto policy with collision and comprehensive coverage, it typically adds only a few dollars to your monthly premium, or about $20 to $40 annually. Gap insurance costs more through a dealer or lender. Usually, you’ll pay a flat fee of $500 to $700, or the dealer/lender will add gap insurance to your loan and you’ll pay additional interest.
Is gap insurance worth it?
Gap insurance coverage is usually worth it for any period of time when your car is worth less than what you owe, especially if you can’t afford to pay the difference in the event of an accident or theft. In general, you don’t need it if you put at least 20 percent down when you finance your vehicle. You can usually drop it after you’ve owned the car for two to three years; by then, you should owe less than what it’s worth.
How do I find out whether I’m “underwater” with my loan?
You’re “underwater” on your auto loan if what you owe is more than the value of your car. You can find your car’s value by checking websites like Kelley Blue Book, Edmunds, or the National Automobile Dealers Association.
There’s no single, objective source that determines your vehicle’s value, so check around. Compare the value of the vehicle to your outstanding loan balance. If the vehicle is worth less than the loan balance, you’re underwater.