Automotive GAP from the Dealer – Good Deal or Bad Deal?
Trying to decide whether or not to get GAP when purchasing your vehicle? Here’s a breakdown of why purchasing GAP Insurance from a Dealer like Champion Cueter Chrysler Jeep Dodge Ram is actually a great investment:
First of all, what is GAP (or GAP Waiver) anyway?
As most everyone knows, new vehicles lose up to 20% of their value as soon as they drive off the lot. Since Auto Insurers pay out claims based on the vehicle’s current value, there can be a large difference (or gap) between what is owed on the car and what the insurance pays out. This is why Guaranteed Asset Protection, (GAP) can be such a life saver.
Why should I get GAP from the Dealer?
You Will Pay No Deductible (unlike the insurance company)
The Insurance companies will tell you that GAP waiver through them is cheaper. This is not true. In fact, the insurance companies will always charge you a deductible when you file a claim. This means that in the end, purchasing GAP waiver through the insurance company will end up costing you more out of pocket. Luckily, the dealership’s GAP policy has no deductible whatsoever.
Your Insurance Rate Will Not Go Up
If you end up filling a claim on your GAP from your insurance company, they will be looking to make that money back somewhere. I’ll give you one guess how… that’s right, by raising your insurance rates! Luckily claims from GAP policy through the dealership will not affect your insurance rates.
The Dealership Will Not Cancel Your GAP for Filing Too Many Claims
Auto Insurers have a bad habit of cancelling insurance policies when customers… well you know… use their insurance. Morality aside, this isn’t a great business model. The dealership will not cancel your GAP for making claims, no matter how many. They would rather keep you as a customer.
You Can Switch Insurance Carriers Whenever You Want
Insurance companies get jealous and bitter pretty easily. If you purchase GAP from one carrier, but later want to switch to another company, you can say goodbye to your GAP. If you would like to keep your GAP, you are locked into using that one company for the remainder of the vehicle loan. Quite the commitment for something you paid for fair and square. Of course, you have all the freedom in the world to switch carriers when your GAP is through the dealership.
Negative Equity Won’t Come Back to Bite You
Let’s say you traded in your old vehicle that you still owed more money on, more than it was worth. The dealer will often roll this difference into your new loan. Problem is, with the insurance companies GAP, they will often not cover this negative equity from your trade-in. They figure that’s on you. The dealership however, will cover the entire amount of the loan, the full amount that was financed.
Your Coverage Limit is Way Higher
Nine times out of ten, the upper limit of coverage will be higher from the dealership’s GAP policy compared to the insurance companies. So if you want your GAP to cover the full cost, the dealership is the way to go.
When an insurance company is providing the “GAP” protection they will typically be more reluctant to deem a vehicle totaled as their loss will be higher to the company – still not always enough to cover the loan balance though. A Dealerships GAP is designed to put you in the best possible financial position in the event of a total loss situation. Ours is set up to cover 150% of the value of the vehicle at the time of sale, not the 125% at the time of loss that many insurers use as a payout.
For GAP Waiver and Finance related questions feel free to contact our finance department by filling out this form below: