Is auto loan lease coverage worth it?

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Chaim Kuphal asked a question: Is auto loan lease coverage worth it?
Asked By: Chaim Kuphal
Date created: Thu, Feb 25, 2021 9:55 PM
Date updated: Mon, Sep 19, 2022 2:31 PM

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Video answer: 2017 auto loan coverage guide

2017 auto loan coverage guide

Top best answers to the question «Is auto loan lease coverage worth it»

If there is any time during which you owe more on your car than it is currently worth, gap insurance can definitely be worth the money. If you put down less than 20% on a car, you're wise to get gap insurance at least for the first couple of years you own it. By then, you should owe less on the car than it is worth.

Video answer: Gap coverage: protecting the loan on your car

Gap coverage: protecting the loan on your car

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If the answers to both questions is no, you may want to consider Auto Loan/Lease Coverage, most commonly known in the auto dealership industry as "GAP coverage." Purchasing Auto Loan/Lease Coverage will ensure your insurance company fully pays off your loan balance if your vehicle is totaled so you can avoid financial distress.

It's important coverage if you find yourself "upside down" or "underwater" on an auto loan or lease and you owe more than what the vehicle is worth. This can happen as soon as you drive your vehicle off the lot, depending on the size of your loan and whether the vehicle was new or used when you purchased it.

If you owe more than your car is worth, loan/lease payoff coverage could be a good investment. However, you should keep an eye on your loan balance and on your car's value. If your loan balance drops faster than your car's value, at some point you could end up owing less than your car is worth.

If you are financing or leasing your vehicle and it gets totaled in an accident, you may owe more than the vehicle is worth (which is the maximum amount you can recoup from basic auto coverage). Loan/lease gap coverage pays the difference between the actual cash value of your vehicle and the unpaid balance on your loan or lease if your vehicle is totaled due to a loss covered by your comprehensive or collision insurance.

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Video answer: Will gap insurance cover negative equity if new vehicle is…

Will gap insurance cover negative equity if new vehicle is…