Do you think I should get gap insurance if I'm upside-down on my loan?
Will gap insurance help me? My current auto insurance carrier doesn't offer it.
Answer provided by
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.
“When you are upside-down on a loan, it means that you owe more on your loan than your vehicle is currently worth. As your vehicle depreciates, it’s value changes. Vehicles can depreciate 20% within the first year of ownership!
Because of this, what you owe on your loan is not often what your vehicle is worth. This can also happen if you have a longer loan term, didn’t make a down payment, or rolled a prior vehicle loan into your new one.
As you are currently upside-down on your loan, gap insurance would help you. It would cover the difference between what you owe on your loan and the value of your vehicle.
If your current car insurance company doesn’t offer it, you should shop around. Many carriers offer gap insurance and by comparison shopping, you’ll be sure you’re getting the best rate.
Requesting car insurance quotes online is a great way to find the coverage you need for an affordable price.
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