GRAND RAPIDS, Mich (WOTV) - If you finance that next new vehicle purchased, there may be some good reasons to consider adding GAP insurance coverage. It's not for everyone … so hopefully these tips can help you in determining whether it's right for your next purchase.
Gap insurance is a specialty type of car insurance that is used to provide coverage used to pay the difference between what a car insurance company will pay if your car is totaled in an accident and the amount that the insured driver owes on the vehicle.
Advantages of Gap Insurance
If your vehicle is valued high at the point of purchase, know that the value typically drops significantly once you drive it off the lot (some indicators say typically 20 – 30% less street value than what you may have paid). If you owe quite a bit on the loan, and certainly if you purchased with little or no down payment, chances are that you will owe more to the lender than your insurance company might be willing to pay in case of a major accident.
In this case, you could avoid paying hundreds if not thousands of dollars to pay off a totaled vehicle.
Gap Insurance can also come in handy if purchasing a vehicle with a rather long loan term (example – 5 to 7 years). It may be several years before you have enough equity in the vehicle to cover the gap in case your car is lost, stolen or involved in a major accident.
Disadvantages of Gap Insurance
There may be times when Gap Insurance isn't really needed … for example, if you get a great deal and purchase your vehicle well below its retail value. Or if your loan amount is already well below the value, gap insurance may not be the best use of your available money.
Whenever possible, pay the greatest amount down on your new (or almost new) vehicle purchase … that's the best equity you can build in your new car. Get a competitive rate on your vehicle loan, and consider talk to your lender about the value of all types of payment protection insurance!
Content in part provided by Credit Union National Association. All topics for informational purposes only and are not intended to provide legal advisement.
Ladies spent the evening mingling over desserts and cocktails while shopping to supporting a great local cause. Here are photos from this year's Shop Soirée charity event!
Yoga is truly for everyone. Anytime of the day you notice a feeling of stiffness or lethargy creeping up on you take a moment and take a seat. You can enjoy a full range of spinal movement from the foundation of any chair. Michele shares few moves to get you started.
Maranda has once again teamed up with a number of West Michigan businesses and organizations to help some families.