Do I need gap insurance for my Toyota Prius?

I owe $23,000 and have a 60-month loan. The dealership offered me gap coverage, but I declined based on the price. I got my finance paperwork and they are offering gap insurance to me for a lower rate. Should I add it?

Answer
“SInce you have a longer loan period, it’s recommended that you add gap insurance to your vehicle. Terms longer than 48 months often mean that at the start of your loan, your vehicle will depreciate faster than your loan balance will fall.
Vehicles typically depreciate about 20% in the first year of ownership alone. Even if you got a good deal on your car, you could still end up owing more on your loan than your vehicle is worth if it is totaled. Gap insurance would help protect you in that situation by paying the difference.
Car insurance carriers also offer gap insurance. You should reach out to your current carrier to see if they offer it.
If not, you can shop around and compare prices. Sometimes you can get a lower rate by adding gap insurance to a policy rather than going through your lender. “
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Emily Maracle
Answered on May 03, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
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