While in the fiance office of your auto dealership, you will be asked to either accept or decline several types of additional coverage for your car.
One of the products offered will likely be GAP.
According to Edmunds.
com, a new vehicle loses 30% of its value in the first year.
So what happens if you are in an accident that totals your car? What happens if your car is stolen and your auto insurance company declares it a total loss? You may be stuck owing the difference between what your insurance company values your vehicle at, and what you still actually owe on your lease or loan! Now, not only have you lost your car, you still owe money on it.
A GAP contract pays the difference between your primary insurance company settlement (the amount your auto insurance company determines your car is worth) and the amount you still owe on your lease or loan.
You must maintain a comprehensive and collision auto insurance policy during the term of your GAP contract.
You may purchase GAP during the financing stage in buying your new car.
The cost may vary from $300-$500 per contract in dealerships.
GAP Plus provides an additional benefit amount of $1,000 to $2,000 to use as a down payment to help you purchase a new car.
Replacement GAP is sold to completely replace the vehicle that was totaled or stolen.
True replacement GAP offers a more comprehensive coverage than the riders attached to auto liability policies.