Gap - what is it, and is it worth buying for your vehicle?
What is gap? Gap is insurance coverage that in the event your vehicle is totaled while you still owe on it, difference will be covered between the value of the vehicle at the time the vehicle is totaled compared to what you still owe.
For example, if you total your car two years into making payments, it's likely depreciated in value, but your overall payment hasn't. Let's say your car was $40,000 at the time of purchase, you total it two years into payments with $29,000 left in payments to make, but your car is only valued at $15,000. Now, if you didn't have gap insurance, you'd be on the hook for the $14,000 difference because most insurance companies will only pay out the car's value at the time of the accident. However, the remaining $14,000 will be covered if you have gap coverage.
What does this mean for you? As the borrower, it can give you peace of mind knowing that if your vehicle is totaled beyond repair, you can have the loan completely paid off so you can get a new vehicle without the burden of paying off the remainder for a vehicle you no longer own. Gap insurance is one item you should consider buying when financing a vehicle.
If you're financing with FCCU, we sell our own gap insurance, and the best part is being a credit union member gives you access to wholesale pricing. Rather than paying a hefty fee for gap coverage as you would else where you'll get the base price for it; since FCCU is non-profit, there's nothing to be added on the back end, so you're only paying for gap coverage.
As a bonus, when you buy gap coverage with FCCU, you also get access to an auto deductible reimbursement plan. This gives you peace of mind, if you have to file a claim on your auto insurance, your insurance deductible is covered for the first three years, and there is NO limit to how many times you can file a claim and get your deductible covered.
Next time you're car shopping, make sure to ask your Loan Consultant about gap and any other add-ons you may be interested in. There's a good chance FCCU offers the same coverages, if not better!
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