Why do I need gap insurance on a new Jeep Wrangler?

I bought my new car two days ago and the salesperson really pushed me to get gap insurance. I turned it down since they were going to charge me $1,000 for it. My car costs $41,000 and my loan will be for $43,000 after fees, etc. Should I have gotten it?

Answer provided by
Emily Maracle
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.
“Based on the amount that you owe and the rapid depreciation of new vehicles, you most likely will want to purchase gap insurance. It covers the difference between the amount you owe on your loan and the actual cash value of your vehicle.
Vehicles can depreciate up to 20% in the first year alone. Depending on the length of your loan, you could end up owing more on your loan than your vehicle is worth.
Even if you are a good driver, there are plenty of people on the road who are not. You want to make sure you’re protected in the event of a total loss.
If you’re worried about cost, there are plenty of car insurance companies that offer affordable gap insurance! Be sure to shop around to find the best price for your new car.

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