Auto GAP Insurance - Is it Really Necessary, or is it a Waste of Money?

We have feelings about that GAP insurance policy in a couple ways. First, we have those that swear by it, have purchased it, and thankfully never had to use it. And there are those, that have been into a situation where their car was declared a total loss. And those folks had to figure out a way to pay the inequity back to the bank. Pretty tough dilemma, but hopefully after I shed some light into this insurance option, it might just become a viable and sensible choice.

The abbreviation of GAP stands for "Guaranteed Auto Protection". Self explanatory but sometimes gets confusing when explained unclearly. Alright, going back into the definition of inequity or negative equity as its most widely referred to. It is when someone owes more to the bank than what the current market value of the asset is. And this asset can be autos, boats, rv's, motorcycles, any asset that has a constant daily depreciating value. What GAP does for consumers, is real simple. In fact, think of it as a safety net in event that if something happens to your depreciating asset, whatever the case may be, that GAP insurance will pay the difference between what is owed and what your insurance company settles for plus the insurance deductible up to a $1,000. And for those of us who have financed or leased a car without putting any sort of equity down, will know exactly what I mean. And statistically, about 75% of consumers are in a negative equity position. Very frightening indeed!

So what I'm closing at, GAP is a worthwhile investment as long as you're financing the full purchase price of an asset. No sense taking a risk hurting your credit. GAP is relatively inexpensive and only costs around $500-1000, which does very little to your monthly payment. So when you're making the decision to get GAP, make sure you're aware at the benefits before you say no.

If you enjoyed this article, please feel free to visit my finance reviews at: http://kookoox10gapins.blogspot.com/

Or if you would like some reviews of some of the hottest automobiles of 2008, please visit: http://kookoox10thereviewspot.blogspot.com/

Shaun Davidson-Automotive and Finance Consultant-2008

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