If you're looking to buy GAP Insurance from your local car dealership, be careful of what they charge you.
In addition to knowing what they are trying to charge you, you will want to know exactly what you are getting when you buy GAP Insurance coverage from them.
GAP Insurance is not all that expensive to a dealership and in realty should cost you no more than:
Realistically, they could sell you anyone of these policies for $395 or less. This is assuming you are not buying a high end vehicle.
High End Vehicles
High end vehicles are going to have a higher GAP insurance cost to the dealer and therefore, a higher cost to you the consumer.
For instance, a $100,000 brand new vehicle will have a greater depreciation in terms of percentage and in real dollars, then a $20,000 new vehicle.
More risk to the insurance company...higher cost to the dealership and that gets passed on to you.
Buying GAP Insurance really all comes down to negative equity and what type of deficiency there might be (if your vehicle is declared a total loss) between your insurance company settlement and what's owed to your lender.
If you know how to avoid negative equity, then GAP Insurance is not necessary.
More on Standard GAP Insurance Coverage
Car dealers know the popularity of GAP and with negative equity being a household word these days, it makes GAP a very easy sell.
A lot of dealers will try to, in my opinion, over profit from the sale of such an important product.
There are some dealers that will sell GAP for $795, when it could have been, profitably, sold for $395 or less.
Be very careful if you are presented with the option to purchase GAP and are told how much it will increase your payment and not disclosed the sale price prior to buying.
More Benefits, Higher Cost
Another thing you'll want to consider is the level of coverage you are receiving. This should be disclosed on the contract under the GAP Insurance coverage section.
Some GAP insurance coverages are very basic while some have some very good extra benefits.
The prices shown above allow the dealer small, but fair profit and were for a very basic GAP coverage, so obviously, the more benefits the coverage offers the more you may be asked to pay. It will be a judgment call for you to make.
To learn more about why you should buy GAP Insurance and how it can protect you, follow this link: How GAP Insurance protects you.