I knew noting about Gap Insurance until the dealer had told me what it was. I bought it through Ford on my lease, and now after reading this board, I am glad I did!

 

GAP insurance is a good idea , but read the fine print on the contract. they will only pay up to 6,000.00 in most cases. so you still owe the rest. The one from ford which i bought on my 03 expy was 500.00 and covered up to 6,000.00. I was glad i did have it when the vehicle got totaled in july of this year. the payoff was 20,770.00 and the loan balance was 25,435.00. without it i would have been stuck paying on a car i didn't even have.

 

Great Idea if you dont have a total loss on the truck.

 

Gap insurance is only good if you did not put enough down on the truck to keep from getting upside down( owe more then it's worth) With that said dealers make a huge profit on gap insurance. $600 seems very high!
If you put enough down to ward off the depreciation, don't bother!
Personally I have never been upside down on vehicle, so I don't even consider it!

If what you are being quoted and as one posted , Ford only covers $6K and you are paying $600 for it, seems a little out of scope!

Insurance is nothing but a bet, life insurance is a bet you are going to die, gap insurance is a bet you are going to total your truck!

 

Ummm, you must know something we don't know about investment banking these days...please tell us where you can invest $600.00 and watch it grow! Grass grows faster that 600 bucks today!

 

Well you might be right about the grass part. $600.00 for 60 mos. at 5% would net you $765.76 there abouts. Not to shabby.

I wonder if anyone besides the Gap Insurance companies has actually figured up at what point the Ins. Co. is most likely off the hook. As in while you pay the principal down at what rate is the vehicle depreciating. There's obviously some point when your out of the hole.

 

Insurance of any kind is bought to reimburse you for losses you can not absorb (or choose not to) with your financial condition. If you are upside down on a vehicle loan, you probably didn't have the ready funds to make a substantial down payment so you would also have a financial hardship if your vehicle was totaled and you had to come up with several thousand dollars to pay it off and still have enough assets to replace the vehicle.

 

The gap insurance from my credit union also pays me back my down payment. I bought the truck from the dealer, using ford credit, and paying 450.00 to the dealer for gap insurance.

Then went to the credit union for a loan, and placed my down payment with them. I flip the loan from ford. Got a lower APR and my 450.00 back from the dealer for the gap. I paid 250.00 for the gap insurance, from the credit union, for the life of my loan. That's not too bad.

 

Ok, I been watching this and commenting some as well.
I also happen to be a retail Insurance Agent. I very seldom sell the gap coverage due to fact most of my customers dont buy new vehicles. (I sell "High Risk" stuff)

BUT........... I just went to one of my companies and figured a price for the "payoff" coverage and it added $32.00 every 6 months. At that price you can keep the cover for almost 4 years and be even with the $250.00 that one person quoted. This particular coverage also will pay up to 25% over the Actual Cash Value of the vehicle.

A quote from their rating software:

PAYOFF Coverage

Choose "Selected" if Loan/Lease Payoff Coverage is desired for this vehicle.

Loan/Lease Payoff Coverage is available to customers where there is a lien holder listed for the vehicle. The lien holder must be a financial institution, not an individual. The coverage may only be purchased if there is also Comprehensive and Collision Coverage on the vehicle. It pays the difference between the actual cash value of the vehicle at the time of a total loss (minus the comprehensive or collision deductible and the salvage value if you or the owner keep the vehicle) and any greater amount you owe under a loan or lease agreement (minus unpaid finance charges, excess mileage charges, and any other charges or expenses associated with the loan or lease). The payoff cannot exceed 25% of actual cash value of the vehicle at the time of total loss.


My only point......
If you want to buy Insurance you might want to talk to a full time Insurance Agent and not a car salesman or Banker. As this particular company charges less for possibly more coverage.

 

As a financial analyst, the good advice on this thread sort of brings a tear to my eye... Proud of you folks for recommending the gap.

I became an over-the-top believer when I was still in college and my wife totalled her car one rainy night when an 18-wheeler tried to swerve into her and she slid right into a concrete median. It was a complete loss and we owed $6k more than the vehicle was worth. Luckily for us, we had purchased gap insurance just a few months earlier when we purchased the car and had rolled an upside-down trade-in into the note. Talk about youthful stupidity... Well, all turned out well - We ended up in a better financial position after the car was totalled than if it hadn't been totalled at all!!!

After a little more education and common sense, we decided to never buy new again, unless for some reason we became very rich. A vehicle depreciates fastest in the first couple of years of its life, and if you buy used you don't have to come up with cash to cover depreciation. The loan amount ends up being very low as well, so you end up being able to say "It's Paid For!" a lot sooner.

We also put a lot of miles on our vehicles, so buying new or leasing just doesn't make sense.

See my sig. By the way - it's paid for.

 

Or have enough down payment to overcome the depreciation.

 

I work in the automotive finance world and would STRONGLY suggest gap insurance to anyone buying a vehicle. I have seen way too many people owe thousands of dollars on a vehicle they don't even have. The extra couple dollars per month is more than worth the peace of mind it provides. I don't sell gap insurance or anything like that, but I have seen a lot of people get burned by not having it. I got gap insurance on my new F150 through the dealership for about $350 that they just worked into my loan.

 

If you owe less than it's worth what's the sense! Let's put it in perspective! you can't randomly say buy gap insurance! Purchsing gap insurance just tells me you didn't put enough down on the vehicle!

 

Well in my case I paid NOTHING down on mine.
With 0% interest WHY pay anything down unless your going to pay for it all?

 

Because what you are quoting is a promotion. promotions are not available all the time. Another point on zero down and 0% interest, your payments most likely are not enough to offset depreciation, hope you don't decide to trade in the vehicle within the next 3 years on another, because you are most likely upside down.
Another reason to make the larger down payment, most likely under a promtopn you were able to choose a rebate amoiunt, plus a low finance charge. With enough down not only have you warded off depreciation and not being upside down, but the monthly payment is probably a lot less than the 0 down 0% interst. You're not truck poor!