The Basics of Gap Insurance
Are you looking for a pre-owned Mercedes-Benz car for sale? Do you want to buy or lease a new Mercedes-Benz vehicle? Whether you want to buy a new or previously owned automobile or you plan to lease a luxury car, you might want to get gap insurance. In fact, you may have to.
Gap insurance is a type of coverage that differs from your standard auto insurance. If your car is stolen and remains missing or it’s totaled in an accident, your standard policy will reimburse you for the current market value of your vehicle. The problem with that is you may owe more to your lender than the amount your car is currently worth.
This is where gap insurance can help. Gap insurance is designed to pay the difference between the amount you get from your standard policy and the balance on your car loan up to a pre-set amount.
While gap insurance is optional when you purchase an automobile, buying this coverage may be a requirement if you’re going to lease a vehicle. Here are some other instances where it makes sense to purchase gap insurance:
- You financed the car you bought for five years or more
- You rolled over the negative equity from a previous loan into your new auto loan
- Your down payment was less than 20 percent of your vehicle’s purchase price
- Your car is projected to depreciate faster than a typical automobile
If you own your vehicle, there is no reason for you to purchase gap insurance despite its affordable price. Drivers who can comfortably afford to cover the difference between their car’s market value and the balance of their auto loan don’t need to get gap insurance either.
To learn more about gap insurance and to see if it’s a smart buy for you, contact Keyes European today.