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Car Loans, Gap Insurance: A Financial Safety Belt
by Peter Garant
Why is gap insurance considered as a financial safety belt? Simply put, it keeps you from being financially ruined when disaster hits your car. For example you are in this situation, you bought a late-model car three months ago using a car loan with a regular car insurance. The car costs $30,000 and you have already made three payments of $900 each month. Then, disaster strikes. An electric post falls and slams down on your car. The car was flattened to half its height. Immediately, you reported it to the auto insurance company, which they in turn play with numbers, mileage, depreciation, market values, and other related stuff. After a couple of days, the adjustor informs you that the worth of your car at the time of the accident is $25,000. This is the amount that the auto insurance company will provide you. But the finance company that gave you the loan will still consider the car to be worth its original price. They also play with numbers, interest rates, taxes and license fees. Then they come up with the amount of $38,000. This is the amount that you need to pay them. If the auto insurance company releases the $25,000, where will you get the remaining $7,000? Your car is already a wreck but you still owe the finance company. You need not face such a dilemma if you have a gap insurance. With the gap insurance, you can ignore the difference between the amount covered by the regular car insurance and the amount you owed the car loan company. This difference is called a “gap” and the gap insurance bridges it so that you need not rack your head for additional financial resources. A car lease contract must also have a gap insurance. It is a feature that prevents you from draining all your finances. Some dealers who lease cars don’t offer a gap insurance. This is okay as long as they include a “gap waiver” in their lease contract. This waiver declares that you are no longer responsible for gap charges that may occur when your leased car is wrecked. When you get a gap insurance, determine how much is offered in the gap policy. You should also know how much will be added to your monthly bill. A gap insurance, for it to be recognized, must be accompanied with comprehensive insurance policies that cover collision. Sometimes, a gap insurance may no longer be needed if the terms in your regular auto insurance policy indicated that the company will pay off the full amount you owed from the car loan lender.
About The Author: Peter Garant is writing articles about bad credit for his credit repair kits blog http://creditrepairkits.blogspot.com/ and articles about car loans for his family finance site http://www.halds.com/category/car-loans/
These articles on lifestyle and more
Return to the selection of car loans
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You may want to try these websites for additional information
http://www.carbuyingtips.com/finance.htm
http://www.carloan.com/
http://www.carbuyingtips.com/usedcarloans.htm
The information provided in this article is the express opinion of the author. Exchangenet is not responsible for the content!
Why is gap insurance considered as a financial safety belt? Simply put, it keeps you from being financially ruined when disaster hits your car. For example you are in this situation, you bought a late-model car three months ago using a car loan with a regular car insurance. The car costs $30,000 and you have already made three payments of $900 each month. Then, disaster strikes. An electric post falls and slams down on your car. The car was flattened to half its height. Immediately, you reported it to the auto insurance company, which they in turn play with numbers, mileage, depreciation, market values, and other related stuff. After a couple of days, the adjustor informs you that the worth of your car at the time of the accident is $25,000. This is the amount that the auto insurance company will provide you. But the finance company that gave you the loan will still consider the car to be worth its original price. They also play with numbers, interest rates, taxes and license fees. Then they come up with the amount of $38,000. This is the amount that you need to pay them. If the auto insurance company releases the $25,000, where will you get the remaining $7,000? Your car is already a wreck but you still owe the finance company. You need not face such a dilemma if you have a gap insurance. With the gap insurance, you can ignore the difference between the amount covered by the regular car insurance and the amount you owed the car loan company. This difference is called a “gap” and the gap insurance bridges it so that you need not rack your head for additional financial resources. A car lease contract must also have a gap insurance. It is a feature that prevents you from draining all your finances. Some dealers who lease cars don’t offer a gap insurance. This is okay as long as they include a “gap waiver” in their lease contract. This waiver declares that you are no longer responsible for gap charges that may occur when your leased car is wrecked. When you get a gap insurance, determine how much is offered in the gap policy. You should also know how much will be added to your monthly bill. A gap insurance, for it to be recognized, must be accompanied with comprehensive insurance policies that cover collision. Sometimes, a gap insurance may no longer be needed if the terms in your regular auto insurance policy indicated that the company will pay off the full amount you owed from the car loan lender.
About The Author: Peter Garant is writing articles about bad credit for his credit repair kits blog http://creditrepairkits.blogspot.com/ and articles about car loans for his family finance site http://www.halds.com/category/car-loans/
These articles on lifestyle and more
Reprint this article free of charge as long as you keep the author's resource box or bio intact and the links active. A copy of the ezine or URL of the page where the article was reprinted emailed to the author would be very much appreciated. car loans
Return to the selection of car loans
You may want to try these articles on car loans
Car Loans, Understanding Your Car Insurance Policy by Jason Hulott1 Approximately 569 Words
Car Loans, Saving Money On The Costs Of Running A Car by Harry Griffiths Approximately 511 Words
Car Loans, Low Interest Rate Auto Loans - Advantages Of Applying Online by Carrie Reeder Approximately 369 Words
Car Loans, Online Car Loans by D. David Dugan Approximately 728 Words
Car Loans, Tips On How To Get The Best Car Loan by Gray Rollins Approximately 567 Words
Car Loans, The Perils Of Buying And Financing A Used Car by Peter Garant Approximately 516 Words
Car Loans, A Car Loan For People With Bad Credit by Peter Garant Approximately 506 Words
You may want to try these websites for additional information
http://www.carbuyingtips.com/finance.htm
http://www.carloan.com/
http://www.carbuyingtips.com/usedcarloans.htm
The information provided in this article is the express opinion of the author. Exchangenet is not responsible for the content!
