Does my 20-year-old brother need to buy gap insurance for his brand-new car?
My younger brother is buying a new 2021 Toyota Corolla for $25,600 with a down payment of $5,120. His loan amount is for $21,000. The dealership is offering him gap insurance. Should he purchase it or skip it?
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Answered on Apr 20, 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.
“A vehicle’s value begins to depreciate about 15% to 20% in the first year. This means that it is fairly likely that your brother’s new vehicle will be worth less than what he currently owes on his loan.
Gap insurance can help cover that difference if the vehicle is marked a total loss by his insurance company.
While many dealerships and lenders offer gap insurance, his car insurance company may be able to offer a lower price as part of his policy. Many carriers offer gap insurance.
Your brother can request quotes from multiple carriers, or he can reach out to his current carrier to see if they offer it to ensure he pays the lowest price possible. “
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