Your new car an depreciate by as much as 20% when you drive it off of the lot. A used car may depreciate a bit less, but many used car buyers are rolling part of their old loan into the new one these days. The point I want to make is that your loan is likely to be quite a bit larger than the dollar amount of your car’s value.

If you should wreck your car, the car insurance company will look at the book value of your car if they want to compensate you for it. So you may hold a $30,000 note, have a wreck, and be very surprised when your insurer wants to settle with you for $24,000!

That is why many dealers offer car gap insurance, and why some lenders even require it before they will approve your car loan. Gap insurance covers the difference between your loan, and your car’s value, in the event of an insurance settlement because the damages are so great that the insurer does not think the car should be repaired.

The dealer may not offer you the best prices, even though it is convenient to purchase gap insurance from them. You are free to shop around, and you can find direct car gap insurance online for half the price of some dealers.

Related posts:

1. New or Used Car Extended Warranties Are Cheaper Direct!
2. What Auto Insurance Fills The Gap?
3. Car Gap Insurance For Less than Car Dealer Price!
4. Low Cost Auto Insurance With Discounts
5. Car Insurance ABC’s

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