Do I need gap insurance for my new 2021 Mercedes GLC300?
The purchase price was $49,000 and my loan is for $33,000. I declined gap insurance through the dealership, but do I need it? What would happen if the vehicle was totaled?
“Since your loan is far below the cost of your new vehicle, you aren’t likely to need gap insurance, which covers the difference if you owe more on your loan than your vehicle is worth.
If your vehicle is deemed a total loss, your insurance company will determine the actual cash value of your vehicle, which is the original price minus depreciation. This is what you’d receive in a payout, and it should cover the balance of your loan.
If you’re unsure, you can calculate the depreciation on your vehicle in a year and what your loan balance will be in a year. If your math indicates that your loan balance may eventually exceed the car’s actual cash value, you can buy gap insurance then.
Most insurance carriers do offer some form of gap insurance, so you may be able to add it to your current policy. If you decide you no longer need it, you can easily remove it.
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Read advice from car experts at Jerry
Browse by topics
What others are asking
Do I need to have car insurance on my vehicle that's going to be listed as non-operational?
I live in Texas and I am going out of the country for a year. I will be registering my car with the DMV as non-operational, but will still be paying my car payment. Since my car is financed, do I need to also maintain car insurance?
Apr 21, 2021
Can I get approved for a car loan if I have $60,000 in student debt?
"I just graduated from college. I already have a job offer for $52,000 a year. But I'm still worried about how much student debt I have ($60,000). Can I get approved for a car loan with that much debt?"
Jun 03, 2021
Can I get approved for a car loan if I have a low income but make a big down payment?
I don't make much since I only have a part-time job, but since I inherited some cash recently, I can make a big down payment on a car. Do you think I can get a loan?
Mar 12, 2021