Introduction about Gap insurance
The difference between the actual cash value of a vehicle during buying and the balance still owed on the financing is known as gap or gaps insurance which was established in financial industry of North America. Mainly gap insurance is used on new and used cars or trucks and even heavy trucks. Gap insurance is a type of car loan or lease, which covers the amount taken as loan which means the difference between the total asset value and the amount covered by other insurance policy. The main purpose behind gap insurance being marketed is to low or reduce the down payment and high interest rate loans etc. A finance company can offer gap insurance at the time of purchasing any vehicle. This type of insurance is normally paid through upfront and that’s the reason why an individual is eligible for a refund if the person sells or refinances their purchased vehicle.
Insurance policy sold by a broker who is regulated by insurance policy and a waiver agreement sold by a finance which is not regulated by insurance policy, are two main types of ways applicable to cover gap insurance. Gap insurance is totally optional thus it’s up to you whether you want to accept or not by your car dealership. After knowing what actually gap insurance is, it is very important to know about its certain advantages and disadvantages before going to apply for it. It is must to learn every fact related to gap insurance so that in future no problems would arise. Some major benefits it holds are:- Lower down payments can be applicable if gap insurance is there in your help. Car owners receive high benefit with gap insurance because the car owners owe more on the vehicle than the actual price of it. Gap insurance is a money saver formula which can save thousands of dollars. Main benefit is gap insurance is very handy. Buying vehicle from dealership means gap insurance to occur automatically.
Pros or benefits related to gap insurance
- No deductible:- The amount which insurance company will pay you for your particular car and the amount you owe on the vehicle you purchased brings lots of money difference which gap insurance means guaranteed auto protection insurance pays. Thus, you don’t need to spend any money for this insurance additionally because it is not deductible.
- Best insurance while buying luxury cars:- Luxury cars provide lots of luxury’s to the person purchased the car but we also know that it is a risky vehicle because there is an increase in initial depreciation of a luxury vehicle than any other vehicles. Thus gap insurance can help easily to cover lots of money if any loss happens.
- Upside down protection through gap insurance:- Car loan carries many upside down thus you have to face the increase in the amount you owe in vehicle than the actual value of the same. In this case gap insurance is the only one who protects in every possible way doesn’t matter about any upside down car loans.
Gap insurance or guaranteed auto protection has brought many good advantages which has gave relieve to vehicle buyers but along with some great pros you should also know about its some cons so that you can decide much better way. There are three main issues that may arise with gap insurance and that is cost, can’t be transferred means warranties insurance is transferable but not gap insurance and time restriction, thus decide what is better for you.