If your car is totaled from accident or declared a loss from theft, GAP insurance is insurance that covers the difference between the value of a car at the time it’s totaled and what you owe on the car loan. It covers the “gap” between the the car’s value and the loan amount.
Imagine that the car you’re making payments on is declared a loss: you still have to make the payments on that loan.
Car insurance only pays what the car is worth at the time of the loss, so GAP debt protection can really come through for you.
Do I need GAP Insurance?
GAP insurance is not necessary for everyone, but it can be a consideration for some drivers carrying a loan to pay for their car:
- If you finance your car for longer than 48 months
- If you finance your car with less than 20% down payment
- If you drive more than the average 15,000 miles annually
- If you finance a car with a high rate of depreciation – All vehicles depreciate, but some cars depreciate very quickly
When you might not need GAP:
- If your vehicle is worth more than the loan
- If the vehicle is declared a loss and you can still make the payments to pay off the loan
- If the vehicle is declared a loss and you won’t need to replace your car
- If your auto loan is for a short term, 12 months for example
How to Get GAP Insurance
You can purchase GAP insurance from First Castle FCU. Purchasing GAP insurance is best done right after signing for a car loan, so FCFCU conveniently offers it at loan closing. Then you don’t have to worry about trying to take care of it later.
If you would like the extra protection of GAP insurance, we are happy to talk to you about it – just give us a call at (986) 867-8867.