Is gap insurance required in Massachusetts?

My car just died about a week ago, so I’m in the middle of looking for a new car. I have enough cash for a down payment, but I still will need to take out a loan. To budget a bit better, I want to make sure I have enough money for car insurance. Does Massachusetts legally require gap insurance?

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Answer provided by
Eric Schad
Answered on Jun 15, 2022
If you’re worried about budgeting, good news! Gap insurance is not required in Massachusetts. However, you may want to consider it after considering your finances.
When you take out a car loan, your balance reflects the price you pay for the car, including sales tax. After you drive the car off the lot, your car depreciates somewhere in the neighborhood of 10%, meaning that you lose value on the car.
If you’re in an accident, your car insurance company will only pay for the actual cash value of the car, which is less than the car loan balance. Without gap insurance, you’re responsible for paying the difference, even if your car is kaput. If you don’t have extra savings, gap insurance just makes sense.
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