Buying a new vehicle can be a complicated process. Decisions have to be made on a number of different options, including the car type and the method of paying for it. The salesperson at the dealership may try to sell you a variety of different warranties and features, but are you prepared to make intelligent decisions in regards to the offers that are presented?
A GAP waiver is one option that you should strongly consider. Although it may not produce any obvious benefits immediately after driving off the lot, it might save you from financial hardship if an unexpected event occurs.
What is a GAP Waiver?
GAP waivers are direct arrangements between the borrower and the finance company that protect the borrower from monetary loss in the event of a totaled vehicle. Insurance companies typically only pay the amount that a car is worth, which could leave an individual responsible for thousands of dollars due to vehicle depreciation. GAP waivers will cover the difference between what your insurance company will pay and the actual amount that you still owe on the loan.
GAP Insurance vs. GAP Waiver
Many consumers have heard of GAP insurance, but not everyone knows about GAP waivers. GAP insurance and GAP waivers are technically different in the fact that GAP insurance covers the remainder of the loan cost, while the GAP waiver drops it. Whether you have GAP insurance or a GAP waiver, the end result is the same.
The Likelihood of Using a GAP Waiver
While it is extremely difficult to determine the likelihood that you will need to use a GAP waiver, it is important to keep in mind that many events could occur that may leave your vehicle totaled. Collisions on the road, fire, flooding, or other natural disasters may leave you without a drivable vehicle due to no fault of your own. Because unexpected events can occur in life, it is important to evaluate your situation and make the right decision that is best for you.
Peace of Mind
Many car buyers are hesitant about paying for GAP protection because they do not readily see the need for it. Although buyers do not receive any tangible benefits, they do receive the peace of mind knowing that they will be covered financially in the event that their cars are totaled.
Tim Meenan, the executive director of the Guaranteed Asset Protection Alliance, states that the “idea of being stuck paying off a loan on a vehicle you can no longer drive is not appealing to any of us” and that without the GAP waiver, “this could be you, regardless of who causes your new car to be totaled.” It may be beneficial to look into a GAP waiver if you are concerned about totaling your vehicle and are not close to paying it off.
Are You in the New Car Market?
If you have damaged credit and are in the market for a vehicle, then you have come to the right place. Our team at Auto Credit Express has years of experience with matching individuals to reputable dealerships, regardless of their credit situation. Just fill out our easy online application and one of our auto financing experts will quickly be in touch with you.