Owning a car, be it new or used, is a tricky endeavor. Cars lose value quickly. So much so that the moment they leave the auto shop, they lose approximately 20% of their value. This is a serious issue, especially in cases whereby the buyer in question took a loan to finance their purchase of the car. This means that the market value for your used car is much less than its retail value. Furthermore, it also complicates issues when it comes to insurance claims in the case of an accident. When the insurance claim is paid, they will pay much less than the retail price of the car. Moreover, if the vehicle was financed by a loan, the owner of the car will be left with a debt and still have no car. This is where gap insurance comes in.
Gap insurance protects car buyers by bridging the gap between the retail price of the car and the loan you owe the bank if your car gets into an accident. However, gap insurance is not a necessary measure for all car owners. At All Star Insurance, we advise you on the technicalities surrounding gap insurance. Various scenarios make it essential to take gap insurance to cushion you from any eventualities. These include:
1. If the car you purchased is intended to be financed for more than four years. This ensures that you have protection if your car gets wrecked, as, after four years, the car will have depreciated by a significant percentage.
2. If you plan on financing a car that is prone to a high rate of depreciation- In general, all cars depreciate quickly, but some cars depreciate faster than others.
3. Gap insurance is a necessity when you plan to lease a car.
4. If the car you plan to purchase will be subject to traveling over 15000 miles per year.
5. If your family owns only one car, and cannot function without it for an extended period.
For better clarification of gap insurance and other insurance solutions, visit our offices at the All Star Insurance Agency, located in Killeen, Texas. Additionally, you can visit our website (https://allstarinsurance.agency/) for information on gap insurance and other tips on saving money on insurance.