Is Gap Insurance Worth It?

When you purchase a new vehicle, the odds of your vehicle being fully protected by your auto insurance if it is totaled in an accident is slim to none. That’s where gap insurance comes in to save the day. At Indy Car Financing, we want our customers to drive with confidence, which is why our experts endorse the importance of gap insurance. It’s a smart investment that can actually save you large sums of money when you need it most.

What Is Gap Insurance and How Does It Work?

Gap insurance is a form of auto insurance coverage that helps pay for the total cost of the vehicle when an accident occurs, as well as any outstanding loan balances you might have to pay for it. Normally, auto insurance is used to cover the vehicle’s current cash value in the event of collision or theft. That money is then given to the lender, but it’s generally not enough to cover the total cost of a new vehicle, plus any outstanding balance you might have with a lien-holder. In the event that your new vehicle is totaled, the responsibility of paying off the remaining loan balance to a lender would fall on you. This is where gap insurance is helpful and can be a lifesaver when you need it. Gap insurance pays the difference between the cash value of your car and any outstanding loan balance you might have on your vehicle.

Is Gap Insurance Right for You?

If you’re financing a brand new car, purchasing gap insurance can be very helpful depending upon the size of your down payment and trade-in equity. The smaller your down payment is, the more likely it is you’ll need gap insurance. If you have a significantly large loan because you made a lower down payment, gap insurance will cover the difference between your vehicle’s cash value and any greater amount owed to the lender. The good news is that you won’t have to make gap insurance a regular part of your auto insurance coverage. Typically, gap insurance is only necessary for about three years if a low down payment was made on a vehicle, and it’s only reasonable for about five to six years otherwise.

Let Indy Car Financing Help With Your Auto Investment Needs

If you have any additional questions about gap insurance, feel free to contact the Indy Car Financing experts at 855-468-6215.

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