Gap Insurance pays the difference between the loan balance and
the actual cash value of
your vehicle, determined by your insurance carrier.
Because new vehicles depreciate on average about 40% when it
is first listed as a used vehicle, you should purchase gap
insurance when you are financing any new vehicle unless you
have a substantial down payment or trade equity.
Dealerships charge between $495.00 and $595.00 for this valuable
coverage, while the credit union only charges $212.00. You save
up to $383.00 off the top!
Example Of How Gap Works:
You purchase a vehicle for $20,000. Let’s say after a year, you’re involved in an accident in which the insurance company totals your vehicle. Because
you pay most of the interest at thebeginning of your loan, you may have only paid your loan down to $17,000. Your vehicle, now in the used car blue book, may only have a value of $14,000. Most insurance companies only pay you for the value of your vehicle. So this can leave you with a deficiency of $3,000 on a totaled vehicle. Here is the good news, if you elect Gap Insurance coverage, it will take care of this difference, plus when you purchase a vehicle through the Credit Union, it also pays additional $1,000 toward the financing of replacing the vehicle.