We are your Fairless Hills area Mazda dealership, and we want you to know you can come to us with any auto related questions. We’ve had a lot of customers lately who were curious about supplemental insurance options, like GAP insurance, so we’re here to explain more today!
While we can’t say for sure without knowing your specific coverage needs and details, we can say that in many cases GAP insurance is a good idea, and you can always ask your insurance agent if it would fit your particular circumstances.
Essentially, GAP insurance (Guaranteed Auto Protection) covers the gap left when you’ve totaled a vehicle that you are upside down on financially. So, let’s unpack this. The term “upside down” means that you owe more money than your vehicle is currently worth.
Being upside down on a car loan for a short time isn’t unusual if you’ve made a small down payment, selected a long payment plan – like five years, or if your car is so new you’ve made barely any payments on it yet. Cars depreciate in value so quickly, as soon as you drive off the lot, your vehicle is already worth less than what you’re buying it for.
However, the bad thing about being upside down on your loan is that if something happens and your car is totaled during that time, you may owe money to your financial institution on your Mazda auto loan that is not covered by your standard insurance.
Many insurances only cover the current value of the car, minus the deductible, so now you can see where there may be a “gap” between coverage and what you will tangibly owe. All this being said, GAP insurance can be a very practical investment, especially if you expect to be upside down on your loan for a bit.
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