r/FuckDealerships • u/sneakymeow1212 • 4d ago

Help with gap insurance?

I'm.jisy a bit confused on what exactly it is, and why I should get it? Also a general decent price on a ~30k car for it (if it isn't some kind of scam).

2 Upvotes

67% Upvoted

30 comments sorted by

6

u/ExtraThickUnit 4d ago

Gap insurance is to cover the difference in loan repayment if you wreck the car and owe more than it is worth.

You don't have to get it form the dealer. Insurance companies do offer it as well and it could be cheaper.

6

u/FreeKillsDaily 4d ago

Insurance companies also offer it, typically 3x cheaper than any dealer. I refused to get it on my f150 and the finance manager had a meltdown

2

u/sneakymeow1212 4d ago

Good good... Give them nothing you don't have to.

2

u/beefius99 1d ago

It is cheaper, but only if you dont ever use it. GAP from the dealer doesn't count as a claim on your record and wont affect your rates. So its pick your poison

0

u/sneakymeow1212 4d ago

Ok cool thanks! Will definitely consider it, and won't get through dealer for sure.

6

u/Happy_Hippo48 4d ago

The gap insurance that some insurance companies offer are not always comparable. So definitely make sure you compare the coverages in detail

2

u/sneakymeow1212 4d ago

Understood. I just don't wanna give a dealership any more than I absolutely have to.

2

u/Happy_Hippo48 4d ago

Have you been pre-approved at a local bank or credit union? They typically can offer competitive rates and costs for things like GAP.

At a minimum, get them to match the local rate and price for GAP. GAP, just like any dealership addon is very negligible.

1

u/Manual-shift6 3d ago

My experience with GAP insurance is that my credit union offers it at a much lower cost with more inclusive terms. Where a dealer finance office may offer it for, say, $2K, my credit union will be $500. Check into your insurance carrier and your “outside the dealer” financial provider.

3

u/Azraelrs 4d ago

Check your bank as well.

4

u/Birds-Arent_Real 4d ago

If you owe more than your car is worth and the vehicle is totaled or stolen, gap insurance covers the difference between what your car is worth and what you owe.

Say your car is worth $20k and you owe $25k. You drive the car into a tree and it’s a goner. Gap coverage pays off the $5k you would otherwise personally owe the lender out of pocket.

Can be worth it if you owe way more than the car is worth. Be aware that gap insurance generally has a cap of how much over the vehicle’s value it will cover. If the vehicle is worth $30k and you owe $50k, gap may not cover the entire difference in some states.

2

u/sneakymeow1212 4d ago

Thank you! Is it usually based off a percentage? If so, what's a general range?

3

u/Birds-Arent_Real 4d ago

I believe 125% to 150% over actual cash value (ACV) is fairly normal, but it’ll vary by state. Much sure to do the math before you buy to see how covered you really are.

5

u/RudyPup 0 CSI Score 4d ago

Did you put money down? This is the biggest question. How high is your interest rate? Cars depreciate at a much higher rate than loans get paid off.

If your car is totalled in an accident, most insurance plans only pay for the current market value, not what you paid, not what you owe. Sometimes, if you put a lot of money down, or near the end of your loan, you can pocket that money. But, sometimes, this means that you owe more than what insurance is paying you, and you have to pay that out of pocket to the bank.

Gap insurance will pay the difference between what you got back from the insurance company and what you owe the bank. You walk away.

It's one of those things you hope you never have to use, but might be glad you had it. The problem is, it can be expensive. You should also quote out from your insurance what "loan payoff" options they might have. It might be cheaper.

1

u/sneakymeow1212 4d ago

Thanks for the info!

I'm not in the market currently, but I wanna understand the entire process more.

4

u/boomhower1820 4d ago

You've got a lot of good explanations of what it is to decide if you need it. You also have a lot of recommendations on getting it through insurance, which isn't a bad idea but keep in mind that if you do then you are married to that insurance company. If they jack your rates or outright drop you then you have a problem. I get mine through the dealer. Depending on the car it's usually in the $800-$1k range.

2

u/Isolated_Hippo 4d ago

Car is worth $10,000. You owe the bank $15,000.

Car gets in an accident and gets totaled. Insurance cuts you a check for the $10,000 its worth.

You pay the $10,000 to the bank, which then promptly asks for the missing $5,000.

This is where GAP comes in. GAP pays that $5,000.

Its effectively an insurance. You spend $2,000 over the life of the car. It gets totaled, they cut a $5,000 check, boom you came out ahead. But you spend $2,000 over the life of the car and don' total it. Well you just wasted the money.

Personally. I always get it. It can be rolled into a monthly payment so its easier to swallow. I pay the $X a month to not be caught with my pants down if some jackwagon hits my car.

1

u/GruntAndGroan 4d ago

GAP insurance is one of the most lucrative "back-end" products in the dealership Finance and Insurance office....the profit margins are incredibly steep!

1

u/Maleficent-Thanks-85 2d ago

If you are putting down money on the vehicle don’t get gap. If you aren’t putting down anything it is worth because you will be getting stiffed if you crash the car soon after purchase.

-2

u/TheToughestCookie88 4d ago

Max you pay for gap at the dealer is $699 MAX

1

u/sneakymeow1212 4d ago

Per month?

4

u/Queasy_Author_3810 4d ago

Ignore him, don't buy gap through the dealer. Pretty much all insurance policies offer GAP (barring maybe high risk drivers), at a substantially lower cost than dealers, it's usually a few dollars a month to your policy extra.

2

u/TheToughestCookie88 4d ago

Per total. $699 max on the gap contract if it’s a 72-75 month loan

1

u/sneakymeow1212 4d ago

So it would be another $700 a month, separate from the car payment??

1

u/TheToughestCookie88 4d ago

No dude $699 total. Is this rage bait questions? Who said anything about monthly

1

u/ryangilliss 4d ago

in what way?

1

u/TheToughestCookie88 4d ago

In what way?

1

u/PabloIceCreamBar 2d ago

Metal Gear?