It's not one of those add ons that dealerships sell to make a ton of profit. I have GAP on every car in my family. It is especially important if you are in a zero down situation with a moderate interest rate. Here is how it works....
Lets say you buy a car that costs 20,000.00. After taxes and dealer fees the amount to finance comes to lets say 23,000.00 (just using round numbers here for example) Then, maybe you buy a service package. Now lets use a moderate interest rate of, say, 3.9%. So after all is said and done you are financing lets say 25,000.00.
Everyone knows that your car loses about 100.00 or more a month in depreciation when you drive off. So, if you get in an accident a year after you buy your car, your insurance will value the car less than the value you owe. If that value is say 15,000.00 and you owe (minus remaining interest) 21,500.00. (called negative equity). GAP will pay the outstanding 6,500.00. If you don't have GAP, YOU are liable for that amount. It's worth the extra 20.00 a month or so to have that peace of mind.
When do you not need GAP?
If you are at a 0% rate and put 20% down or more (buying equity) you are probably safe opting out of GAP. (Double check with the finance manager where you buy) BUT for about 90% of the buyers I sell to, I say "Fill the GAP!" Pay a few dollars extra now to save a chunk later...and the possibility of hurting your credit. As always, you can comment here, or ask any question you may have. E mail me at cashatkia@centurylink.com or call me at Jim Marsh Kia in Las Vegas. 702*946*1000
Have a KIA Day!!
