It’s a well-known fact that once you buy a new car, it immediately depreciates by thousands of dollars. Despite this deprecation, the loan you took out to pay for the car is still valued at the original purchase price. Guaranteed Auto Protection insurance insures you against major losses if you get into an accident resulting in necessary auto body repairs . Check out the information below to for a basic guide to GAP insurance.
What it Does
GAP insurance will insure you for the monetary difference between the market value of your vehicle and what you owe on the loan. This is especially useful in the early years of a car’s life, when the car has depreciated greatly and you still owe most of the loan value. GAP insurance usually covers accidents and theft during that time as well.
When to Use It
GAP insurance will prove itself useful in the event of a car accident that takes place early in your vehicle ownership. For example, if you total your $35,000 car in the first few months, your insurance may cover the depreciated value of $30,000. At this point, you may still owe $33,000 on your auto loan. GAP insurance covers the difference so that you do not take a loss.
Why You Should Buy It
GAP insurance makes sure you don’t lose out while paying back your loan if your car gets in an accident or is totaled. Your loan amount has to be less than or equal to $100,000 dollars in order to qualify, and your loan term can’t be greater than 84 months. If you qualify, you should buy it to remove the risk of substantial losses if the unthinkable happens. Don’t be stuck in the red after working so hard for your new car.
Hiring a good body shop is essential to receiving competent collision and auto body repair. Michael J’s Body Shop is committed to getting you back on the road after an accident. Call us today at (408) 279-2070 for more information.