Gap Insurance Question
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Junior User
Joined: Apr 2003
Posts: 88
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From: north-east Illinois
Gap Insurance Question
Last week got our F-350, MSRP $44,235, financed $34,800, I'm thinking I'm ok without gap insurance. Does anyone know how I can find out the value of the vehicle right now as it's not new anymore?
Thanks
Thanks
Senior User
Joined: Feb 2003
Posts: 420
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From: Ohio
Gap Insurance IS good to have, BUT.....
Given that it covers the difference between what is OWED and the value of the truck at the time of a hypothetical total loss:
Citing the numbers of the original post, $38460 financed at, say 4%, for 60 months, that payment is about $641, of which $61 a month is the interest.
That means that 40% of the loan is payed off right at the 24th month of the loan.
The issue is, when does the amount left on the loan become less than the value of the truck.
Certainly, after 24 months, the truck hasn't depreciated 40%, i.e. the truck is worth more than $44235*0.6 = $26,541.
The added benefit with the SDs is that, as automobiles go, they hold their value much better than most.
Therefore, the gap insurance is only covering you (maybe WAY) less than 24 months.
It's worth getting for a MORE rapidly depreciating vehicle financed at non-premium rates. For example, if your credit is bad, and you have to finance a Ford Focus at 13%, the situation changes significantly. It may take 36 months+ to become right side up.
It also seems that Emil had a significant down payment, as well, thus he is ahead of the game on the gap.
Emil, in my humble opinion, forget the gap insurance. The other consideration is that the vehicle has to be a total loss. The probability of creating a total loss with a SD is different than the proability of creating a total loss on a Focus.....you know, the mass times velocity thing that works in OUR favors
It all comes down to what is needed for your personal peace and quiet. FINANCIALLY, stricly looking at it from a cash flow standpoint, it doesn't make sense, though there is a slight risk associated without carrying it.
Lastly, dealers wouldn't sell it if it wasn't a money maker. It's clearly worth having on a lease, as you are operating a vehicle that you don't own. On a reasonable finance.........drop it!
OK.....I'll shut up now.....
Given that it covers the difference between what is OWED and the value of the truck at the time of a hypothetical total loss:
Citing the numbers of the original post, $38460 financed at, say 4%, for 60 months, that payment is about $641, of which $61 a month is the interest.
That means that 40% of the loan is payed off right at the 24th month of the loan.
The issue is, when does the amount left on the loan become less than the value of the truck.
Certainly, after 24 months, the truck hasn't depreciated 40%, i.e. the truck is worth more than $44235*0.6 = $26,541.
The added benefit with the SDs is that, as automobiles go, they hold their value much better than most.
Therefore, the gap insurance is only covering you (maybe WAY) less than 24 months.
It's worth getting for a MORE rapidly depreciating vehicle financed at non-premium rates. For example, if your credit is bad, and you have to finance a Ford Focus at 13%, the situation changes significantly. It may take 36 months+ to become right side up.
It also seems that Emil had a significant down payment, as well, thus he is ahead of the game on the gap.
Emil, in my humble opinion, forget the gap insurance. The other consideration is that the vehicle has to be a total loss. The probability of creating a total loss with a SD is different than the proability of creating a total loss on a Focus.....you know, the mass times velocity thing that works in OUR favors
It all comes down to what is needed for your personal peace and quiet. FINANCIALLY, stricly looking at it from a cash flow standpoint, it doesn't make sense, though there is a slight risk associated without carrying it.
Lastly, dealers wouldn't sell it if it wasn't a money maker. It's clearly worth having on a lease, as you are operating a vehicle that you don't own. On a reasonable finance.........drop it!
OK.....I'll shut up now.....
Last edited by Kraut; Oct 14, 2003 at 06:58 PM.
