Why You Need GAP Insurance

January 16th, 2018 by

GAP insurance literally means two things. “GAP” is an acronym for “guaranteed asset protection.” What the insurance actually does is to help cover the difference, or “gap,” between what you owe on your automobile and what your insurance company will pay if it is considered a total loss. Here’s why you need GAP insurance.

Any car, but especially new cars, depreciate quickly. A new car can lose 20-30% of its value in the first year you own it. Conversely, your loan payments are structured so that you pay more interest and less principal at the beginning. That can mean it takes a while to gain any equity. If you total the car, it could be worth less than what you owe, meaning the insurance payment won’t cover what’s left on your own. GAP insurance will cover that “gap,” so that you don’t owe anything on your total car.

Talk to Beaman Toyota about GAP coverage when you purchase your next vehicle in Nashville.

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