Consumer Car Buying Advice Blog

When you buy a new or used car, the dealer may also want to sell you certain “add-ons” such as rust proofing, window etching and gap insurance. The question is, which one of these items makes sense and which ones can you do without?

You should consider getting gap insurance

Here at Auto Credit Express, we are often asked if any of these additional expenses makes financial sense. While window etching, rust proofing and paint protection are almost unnecessary with the way cars are built today – manufacturer alarm systems and galvanized steel come to mind – gap insurance, especially for cash-strapped bad credit car buyers, can avert a potential financial disaster.

What is gap insurance?

Gap insurance is just what the name implies. It covers the difference between what you owe on the car and what it is worth.

Say what? Okay, here is a worst case scenario. Let’s say you buy a car for $17,000 before taxes. You put 10% down and begin monthly payments of $350 dollars. Three months later you get into an accident and the car is a total loss. The insurance company does some calculations and issues a check for $13,500. Unfortunately, you still owe the bank almost $16,000. In order to satisfy the requirements of the loan, you need to continue to make payments until the loan is paid off.

Here is where gap insurance comes into play. If you have gap insurance, the gap insurance company will pay the difference between what your car insurance company paid and the balance of your auto loan.

The Bottom Line

With just a small increase in your monthly payment, you can avoid paying thousands of dollars to the bank for a vehicle you no longer have. You can also avoid the possibility of defaulting on your loan by not paying the bank the money you owe them.

For more information on bad credit auto loans, visit our website at www.autocreditexpress.com. Here you will find auto loan calculators as well as answers to frequently asked questions about bad credit auto loans. You can also fill out a loan application in the privacy of your home and get a quick answer from one of our participating dealers and get you back “on the road” to re-establishing your credit.

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