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"GAP Guaranteed Asset
Protection - Auto Car GAP Insurance
- are you covered?"
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Auto Car GAP Insurance - are you covered?
GAP - Guaranteed Asset Protection-
insurance covers you for financial loss in the event that your car is
stolen or in an accident and subsequently written off by insurers.
GAP covers the difference between what the car is worth and any finance
still outstanding on it. This makes
auto GAP insurance an attractive
prospect to someone driving off the forecourt in his or her brand new car. This
is because
new
cars have the highest rate of depreciation.
Considering the number of accidents each year and the fact that most stolen
cars end up written off or vandalized, there is a market for it.
However, this would only be in the case where the
owner of the vehicle owes more than it is worth. This might be so if the
initial deposit was small, if the car's depreciation is high (for example on
new cars), or if there is a high interest rate on the car loan.
Auto GAP insurance also has its place in car leasing as many lease
contracts require it. This is because under lease agreements, the person
leasing the car is liable for the cost of the car if it is written off or
stolen. Car lease payments are often a lot lower than car loan repayments and
therefore the shortfall between the value of the car and what has been paid can
be significant.
Auto GAP insurance comes into its own for
those who will owe more than the value of their car for an extended period or
for people who are leasing a car. However, it is a good idea to shop around if
you are considering GAP insurance cover, as the package the dealer may
be offering could come at a higher premium than elsewhere.
