Correction: I was insisted of not buying it.

 

If you total your car, and you owe more on it than its worth, it pays the difference to the lender.

I.E. if you owe $18,000 and wreck the car to the point of it being totaled, and the value of the car is only $16,000, you would owe that $2,000 to the lender if you don't have GAP insurance.

Now do you need it? It all depends on how much you put down, how many years you financed the car for, and what your APR is. These cars hold their value pretty well, so if you put down a little bit, went with a 5 year note, and have a decent APR, you most likely don't need it, but it's all up to what you want to gamble. For $200 it's not a bad gamble.

 

Love this forum, always have quickest response, my APR is 2.9% with 5 years loan, i put down 20% downpayment and loan the rest. if anyone is not recommended, I would go cancel it within 30 days. Thanks everyone

 

You might be able to keep the GAP insurance on until you don't need it anymore, and then get a pro-rated refund. Thats what I would do if it is possible.

 

Most folks that purchase GAP are leasing.

 

If you put a real 20% down, Gap insurance is not necessary in my opinion.

 

The finance guy working with us advised us not to get GAP.

 

It's just another form of insurance. Don't get it if you can afford to fund the difference of the loan balance and the value of the vehicle if it gets totaled, regardless of how much you put down. I put no money down but can afford to fund the difference in the VERY RARE event I'm in a accident that is bad enough to total the car.

 

GAP insurance is useless IMO. A lot of insurance companies (including mine) will give you a new car replacement regardless of the KBB. Best idea is to call your insurance company before buying ANYTHING from the dealer (parts, insurance , or otherwise). Again, just my 2 cents.

 

everyone is suggesting not to get it, I bought it for $200, i negotiated down the price, it was $495. I told the finance guy that I really didn't need it. blah blah.

 

I bought it. I financed and put zero money down, so if I were to total my car in the next few years, I'd be way upside down.

I bought a car a month before I bought my Elantra and 3 weeks later, it was stolen. Had it not been for GAP, I would have been out of luck. Not every insurance company has a "new car replacement" policy. I am a proponent of GAP insurance!

Also, if you get GAP, make sure you get the version that covers your insurance deductible.

 

The down payment doesn't affect the value of the car if it's totaled - it just impacts the remaining balance of the loan or lease. With 20% down, he'll owe less than if there was nothing down, so it's unlikely the remaining balance will be more than the value of the car.

 

I don't know where you guys are getting your insurance, but it has been my experience that unless it is explicitly outlined in the policy that new car replacement cost is provided, it is not included in auto insurance policies. Furthermore, that prevision is VERY expensive and that is the reason it is not included in most policies. My daughter's car was totaled by another driver 8 years ago and the insurance company didn't come anywhere near giving us enough to cover replacing the car (the car was two years old). Needless to say, I had to cover the replacement cost of the new car we bought. Unless you put enough down to cover the depreciation of the vehicle over the life of the loan, GAP insurance is cheap coverage especially at the $200 cost the OP stated. Even the original $495 would be cheaper than replacement cost coverage on your insurance policy over the life of a 5 year note and that is if you have a good driving record. Insurance companies don't give you anything out of the goodness of their hearts. If they can find an out, don't bet on everything outlined in your policy being covered, either.

 

I don't know where you guys are getting your insurance, but it has been my experience that unless it is explicitly outlined in the policy that new car replacement cost is provided, it is not included in auto insurance policies. Furthermore, that prevision is VERY expensive and that is the reason it is not included in most policies. My daughter's car was totaled by another driver 8 years ago and the insurance company didn't come anywhere near giving us enough to cover replacing the car (the car was two years old). Needless to say, I had to cover the replacement cost of the new car we bought. Unless you put enough down to cover the depreciation of the vehicle over the life of the loan, GAP insurance is cheap coverage especially at the $200 cost the OP stated. Even the original $495 would be cheaper than replacement cost coverage on your insurance policy over the life of a 5 year note and that is if you have a good driving record. Insurance companies don't give you anything out of the goodness of their hearts. If they can find an out, don't bet on everything outlined in your policy being covered, either.

I have never bought a used car so I can't speak in that regard, but I have had 2 new cars totaled out in the last 10 years. One was a lease and the other was a purchase.

Lease was insured with Farmers (my old insurance company and car was a Nissan Pathfinder) and it was totaled approx 2 years into the lease...balance of loan fully paid with no recourse to me. No money down other than standard $1,500 drive off.

Purchase was insured by State Farm (my current ins company car was a BMW 328i) totaled within a year of ownership....balance of loan was fully paid with no recourse. Put $5K down on a $40K car.

I do opt to get a slightly higher coverage than normal to protect my personal assets, so don't know if that is what made the difference. I stay away from smaller companies and online companies as well to avoid the small print. My father had AAA for 30 years and totlaed a few cars with no recourse as well. In summary, my family has never paid the difference other than my brother-in-law who went with a low rate company on a used car purchase.

 

I would most likely get Gap insurance if it's my kids first car and the car is not fully paid.

 

If you were to refinance your car with State Farm, they include GAP insurance free and have very competitive interest rates.... Other insurance companies who have financing may also do the same.