What is Gap Insurance and is it Worth the Extra Cost?

Posted: Thursday, March 31st, 2016

Most drivers know that when they buy a new car, the value begins to decline as soon as it leaves the dealership. To help reduce the financial loss in the event of an accident, some buyers seek gap insurance. Learn all about gap insurance from the experts at Green Light Auto Credit, then fill out our handy online application to get started on your next auto purchase.

What is Gap Insurance?

Gap insurance is a special policy designed to cover the gap between your car’s value and the amount you owe. This can be significant for a new or high-end car. This gap is often the result of the retail price being higher than the vehicle’s resale value, both because of initial depreciation and due to the addition of extra fees added to the contract at the time of purchase, such as tax, title, and licensing.

Is It Worth the Cost?

Depending on a variety of factors you might find that a gap insurance policy is well worth the additional monthly expense:

  • Mileage: If you have a high-mileage commute, you can expect your car to depreciate more quickly.
  • High Rate of Depreciation: Not all vehicles depreciate at the same rate.
  • Upside Down: Vehicles that are worth less than the financed amount may require gap insurance.
  • Long Term Loan: If your loan term is longer than four years, gap insurance could benefit you.
  • Leasing: Many lease contracts require gap insurance.

Answers to Car Insurance Questions

If You’re Looking for Your Next Car, Let Green Light Auto Credit Help

If it’s time to start thinking about your next new or used car purchase, you can trust the experts at Green Light Auto Credit to help you find the best rates regardless of your credit history. Fill out our simple no-obligation form to get started, and we’ll take it from there.

For Information About Gap Insurance and More, Trust Green Light Auto Credit

Trust Green Light Auto Credit for information about financing, gap insurance, and more. Contact us at (800) 200-5551 to find a location near you.