Business Finance Tips

Is Car Gap Insurance Worth It?

Car gap insurance is a special kind of insurance that covers the shortfall or ‘gap’ between what you owe on a loan and the payout amount if your car is written off as a total loss, or stolen, during your insurance coverage period.

Let’s say you owe $20,000 on your car loan. A huge truck slams into your parked car and completely writes it off….you are safe! The truck driver’s insurer will pay $15,000 agreed value. Gap insurance will make sure you’re not out of pocket by $5,000.

Car gap insurance will settle the loan, and you won’t have to pay back a loan on a car that’s written off and no longer have any more.

How do I get it? Firstly, you’ll need to start a loan contract. You’ll also need to take out a comprehensive car insurance policy.

Is it worth it? If your car is a total loss, the amount between the eventual payout and what you owe on a loan could be staggering. It’s peace of mind for borrowers who are concerned their comprehensive insurance payout won’t settle the loan. It significantly reduces and eliminates the risk of your own finances being used to pay off a car that you can no longer use.

In some cases, gap insurance potentially provides you with additional funds to purchase a new vehicle and protects your credit history from any negatives.

Usually, the premium covers you for the full term of the loan and can be included in the amount being lent out.

Remember, always speak to a Finance expert.

Jan, who has 25+ years in the finance industry, helps high net worth clients and businesses to obtain finance. Her passion is educating, planning and working with her clients to achieve their dreams. ca 0468 371 449 // www.startfreshfinance.com.au