GAP insurance?

[GuvnerITG]

Have any of you ever bought GAP insurance when you bought your cars? Is it worth it?

I'm upgrading to a 12 GTI this week and the dealer is offering GAP insurance for a cost of $600. I know for the first 2yrs I will be in negative equity at worst of about about $4500, but once I make some extra payments I'll catch up in 2yrs. I would essentially be paying $600 to insurance a $4500 GAP from replacement cost to the outstanding loan.

Worth it??
*And BTW I'm in Canada where you cannot buy GAP outside the dealer. Oh, Canada.

 

[Zillon]

On a used car, where the majority of the depreciation has already happened, GAP is not really a necessity, especially if you're putting $1000 down.

Just check with your insurance what they base the value of the car off of, in the event it's totaled.

 

[GuvnerITG]

On a used car, where the majority of the depreciation has already happened, GAP is not really a necessity, especially if you're putting $1000 down.

Just check with your insurance what they base the value of the car off of, in the event it's totaled.

Insurance is going to go with actual cash value, or what the car is worth to buy used at the time. I paid a fair price for the car so really I'm in negative equity over taxes and fees, thats where the $4500 comes from. And no money down on the purchase.

 

[Zillon]

Do you have the liquid assets to cover the $4500 in negative equity the moment you drive it off the lot? If not, get it.

 

[lilfleck]

You can buy GAP insurance from other companies as well. It doesn't have to be from the dealer. You may get a better rate elsewhere. For example your insurance company. Check the difference in price.

The nice thing about the insurance company is you can take it off your policy at any time. So if you do get back in the black, then you can remove GAP at your will.

 

[rawbdog]

Waste of cash.

 

[GuvnerITG]

I can't buy it from my insurer, only from the dealer and I cannot cancel it. Once its purchased its paid for and I cannot buy it for just 2 years, it has to be purchased for the whole loan term.

 

[lilfleck]

I don't understand why you can't buy it from your insurance company? I had the option w/ my insurance company...

 

[rawbdog]

I don't understand why you can't buy it from your insurance company? I had the option w/ my insurance company...

Same. And I have AAA.

 

[GuvnerITG]

I don't understand why you can't buy it from your insurance company? I had the option w/ my insurance company...

Insurance in Canada is different, you can only buy it from the dealer. My insurance broker does nt sell it and there are no private sellers, sucks cause I feel like the dealer has a monopoly on it.

 

[danielj1]

If I had that much negative equity I'd have gap insurance. If the unfortunate happened and your car was totaled or stolen, do you want to be out money because the insurance company will only cover the value of the car, not the amount of your loan?

In that case you'd really be hurting. No car and ~$4,500 in debt!

 

[XGC75]

I bought gap insurance from my lender for $300. Definitely worth it for me. It was rolled into my payment (not capitalized into the interest-accruing principal). Now, for $5.55/mo, I'm out of my loan if the car is totaled regardless of the value. For this car I think it was worth it. I'm not under water anymore, but I was at least $3k under at one point.

 

[lilfleck]

I would see if you can negotiate the insurance. If so, take it. It makes sense for the peace of mind...

I would also try to figure out how long it would take you to not be upside down on the car. You can try to figure this out by looking at older cars. So right now your car is a 2012... its worth x dollars today. To guestimate what it may be worth in two years, look at a 2010 model.

That being said, since its a generation behind now, it may depreciate more. So you could probably look at the 2009 and look at the % difference between the MKV and MK6.

 

[Jaber]

Food for thought.

I didn't have my checkbook when I bought my GTI. So next morning we take my brand new GTI, to drop off check. Some bish comes out of a parking lot, while I'm going 40MPH. Luckily I spotted her and braked enough to miss t-boning her by 2ft. My heart dropped and thanked my lucky stars. Would of sucked to have a wrecked car, with less than 100 miles on it.

 

[GuvnerITG]

I just have a hard time paying $600 for something like that. I'll try talking the business manager down to $400 which I feel is reasonable.