Buying Gap insurance on new vehicles.

[highgrit]

I bought a new truck and I was running the numbers before I signed the contract. And the dealership added gap insurance in the payment. It cost $799.00 and only showed up in the monthly payment. I just wanted to pass this on. Do the math yourself on the interest and make sure everything adds up.

 

[TexasBred]

Never heard of it. What does it insure?

 

[skyhightree1]

gap covers $ that your vehicle is valued vs what you have a loan for example you buy new truck 35k leave the lot its worth 25k if you total it or something it pays the difference.

 

[John SD]

gap covers $ that your vehicle is valued vs what you have a loan for example you buy new truck 35k leave the lot its worth 25k if you total it or something it pays the difference.

gap sounds like a newfangled way for insurance to rip us off. :???:

I bought my new car in Nov 2012 with 0%/3yr financing. Not sure I would do it again. No advantage to paying the car off now unless I dropped collision and comprehensive insurance which would save about $200/yr.

I bought the Kubota with 0%/5 yr financing. Have the purchase price of the tractor insured with on my State Farm ranch policy. Far as I know the tractor is a $5000 deductible same as everything else on the policy.

Also have my 2000 model baler insured for the original $30K purchase price. Guess I couldn't replace it with a new baler today for that. :???:

 

[shadyhollownj]

Buying a new truck thats 50k plus you have to get gap insurance. Like everyone always says when you drive off the lot the truck loses 15k. When you total that truck the gap insurance covers that gap that will be in what the truck is worth in your insurance companies eyes and what you actually owe on your truck. Highgrit that is way to much money. My gap on my past three trucks was under 200 bucks.

 

[skyhightree1]

Buying a new truck thats 50k plus you have to get gap insurance. Like everyone always says when you drive off the lot the truck loses 15k. When you total that truck the gap insurance covers that gap that will be in what the truck is worth in your insurance companies eyes and what you actually owe on your truck. Highgrit that is way to much money. My gap on my past three trucks was under 200 bucks.

Shady I was thinking that had gap insurance plus the insurance that if something happened to him it would pay off the loan + a little bit more $ to line someones pockets

 

[highgrit]

Shady, I got something like it from Progressive Insurance. It cost $60.00 extra for 6 months. I just thought the dealership should of asked if I wanted it not just add it in the payment. I thought gap insurance was a good idea for the first year.

 

[Jogeephus]

I thought there was a law against sticking hidden insurance on your notes without your consent. I know they used to like to stick a life insurance policy on your note with the lending institution being the beneficiary to pay off the balance owed. Pretty sure they made this illegal in Georgia after a certain senator wasn't re-elected and who just so happened to have an office in the insurance company that wrote these policies.

 

[Bigfoot]

Over 20 years ago, I was in finance. That product wasn't available then, or atleast to my knowledge it wasn't. It sounds like a good product, if you can get it cheap enough.

 

[highgrit]

Jo, I bought the truck in NC. The sales person sent a sales contract with all the numbers and how much the payments per month would be. My 2.99 and their 2.99 rate was a $18.00 difference in their favor. I called and asked how they figured their rate, and that's when they told me about the extra $699.99 for gap insurance. I never heard of this kind of insurance before, so I called our Farm Bureau agent and she said they sell it for $350.00 for the life of the loan. Then I called our bank wanting some info about Blue Book values, and gap insurance. I can't believe I bought insurance because I might total my truck out in the next 6 months, and my insurance won't cover replacement cost for a vechicle. And on 2 tractors and our 4 wheelers and Kubota the insurance is for replacement value minus the deductible.

 

[TexasBred]

I did find this about it. Seems a lender would be better off just making sure he got at least the 1st years depreciation in the form of a downpayment before financing:

Who should buy it?
If you own your car outright or have a lot of equity in it, you don't need gap insurance.
Bill Pearse, vice president of auto product strategy and design for Travelers Insurance, says "Anybody who has an auto loan or lease and hasn't put a significant amount down should buy car gap insurance."

You're a likely candidate for gap insurance if you:

Lease a vehicle.
Finance for 60 months or more.
Put less than 20 percent down.
Roll negative equity from a previous vehicle loan into a new vehicle loan.
Drive more than the average 15,000 miles annually.
Purchase a vehicle with a history of high depreciation rates.
More than likely your insurance carrier offers auto gap insurance, and many carriers will allow you to add it at any time to cover the original loan.

Cost of car gap insurance
Pearse says Travelers calculates gap insurance premiums at roughly 5 percent to 6 percent of the premium for collision and comprehensive insurance you have on the car. On a $1,400 annual premium -- with $420 to $560 of that typically for collision and comprehensive -- gap insurance would cost $20 to $30. And the cost goes down along with the cost of collision and comprehensive as the vehicle ages.
Pearse says one of the biggest mistakes consumers make in buying car gap insurance is to buy it at the dealership where it costs more. "It's the belief that you can only purchase it from the vehicle manufacturer at the time of sale," he says. "The truth is that you can purchase it any time and insurance companies are less expensive."



Read more: http://www.bankrate.com/finance/insuran ... zz2tzmJCW4

 

[highgrit]

TB, that's a different way to look at it. Everybody says you lose 5k when you drive it off the lot. What I want to know is where can I buy a used truck with less than 10k miles, cheaper than I can buy a new one. Factory rebates on 2013's is really good, or you can have 0% intrest rates, but not both. I put 1/2 down and was scared if something bad happened within the first year I would lose 5-7k. For $60.00 a year I felt it was a no brainer. The thing that chapped my lips was the dealer maybe trying to slide it in without my knowledge.

 

[TexasBred]

TB, that's a different way to look at it. Everybody says you lose 5k when you drive it off the lot. What I want to know is where can I buy a used truck with less than 10k miles, cheaper than I can buy a new one. Factory rebates on 2013's is really good, or you can have 0% intrest rates, but not both. I put 1/2 down and was scared if something bad happened within the first year I would lose 5-7k. For $60.00 a year I felt it was a no brainer. The thing that chapped my lips was the dealer maybe trying to slide it in without my knowledge.

I guess that's cheap enough IF it covers you. Just read the fine print on any note/contract you sign. As for rebates, I don't believe in them. Just give me your bottom dollar drive out price. I'll get one more bid from another dealer and hope the two are relatively close.

I suppose there are companies also doing this on real estate since we began financing 140% of the purchase price several years ago and no primary insurance company is going to insure that much on a house.

 

[highgrit]

I hope I never have to find out TB. And yes that IF scares me, most of them paper-pushers are shyster's in my eye's.