"GAP" Coverage in New York State

[NYF32DRIVER]

Does ANYONE know the FACTS with regard to GAP coverage ?

My car is FINANCED (Leases are covered) and after 8 months is already worth

LESS than I OWE.

GEICO, my insurer does NOT offer this coverage. A friend of mine was recently

burned with a totaled car after a year because of this.

Anyone have some HARD facts regarding this ?

Thanks,

Joseph

[Cuz5150]

I can not help with all the fine details on Gap insurance. However, you can get Gap insurance from your dealership. They always ask me when i buy a new car....

[NYF32DRIVER]

Originally Posted by Cuz5150

I can not help with all the fine details on Gap insurance. However, you can get Gap insurance from your dealership. They always ask me when i buy a new car....

I understand that but everything I have read advises AGAINST getting it from the dealership...

[Bimmer-Bob]

^ Every time I shop around I can never find anyone able to beat GEICO. I've been with them for 6 or 7 years, so I think it has to do with the longevity discount I get from them each year. Plus claims are a breeze.

As for gap insurance, I got it through USAA, who financed my auto loan. It was a $249 lump sum paid at the time of the loan. I could have elected to roll it into the loan amount if I wanted to.

I'm not sure if you can get add this kind of coverage at a later time. If not, you might look into refinancing with somebody and adding it then.

Are you eligible for USAA? They are really great to deal with, which seems weird to say about a financial institution, but it's true.

[NYF32DRIVER]

Originally Posted by Bimmer-Bob

^ Every time I shop around I can never find anyone able to beat GEICO. I've been with them for 6 or 7 years, so I think it has to do with the longevity discount I get from them each year. Plus claims are a breeze.

As for gap insurance, I got it through USAA, who financed my auto loan. It was a $249 lump sum paid at the time of the loan. I could have elected to roll it into the loan amount if I wanted to.

I'm not sure if you can get add this kind of coverage at a later time. If not, you might look into refinancing with somebody and adding it then.

Are you eligible for USAA? They are really great to deal with, which seems weird to say about a financial institution, but it's true.

I have had two non-accident claims with Geico (hit while parked and glass) everyone I have checked with wants TWICE what they do for the same coverage.
As for this GAP thing... it's REALLY starting to bother me.

[MPFit]

How low was your down payment? So your upside down after 8 months? I'd be upset too, I'd echo what was said- if you must have it, go shopping. Yes you'll pay more but you'll have the peace of mind with the gap insurance.

[NYF32DRIVER]

Originally Posted by MPFit

How low was your down payment? So your upside down after 8 months? I'd be upset too, I'd echo what was said- if you must have it, go shopping. Yes you'll pay more but you'll have the peace of mind with the gap insurance.

Down payment ? Whats that ? I have never and will never put a penny "Down" on a car. I only financed because of the 0.9% and had to roll 6 payments from the previous car into it. I did not intend on keeping the car longer than 2-3 years anyway. The sticker price of my car was $48,000 ! It's in perfect condition. Now I'm told its only worth 34,000 (if I'm lucky) but things will "even out" in a year or so.

Bottom line: Back to Leasing... I will never finance again.

[Guildenstern]

Originally Posted by NYCE90DRIVER

Down payment ? Whats that ? I have never and will never put a penny "Down" on a car.

[moveswiftly]

Originally Posted by NYCE90DRIVER

Down payment ? Whats that ? I have never and will never put a penny "Down" on a car. I only financed because of the 0.9% and had to roll 6 payments from the previous car into it. I did not intend on keeping the car longer than 2-3 years anyway. The sticker price of my car was $48,000 ! It's in perfect condition. Now I'm told its only worth 34,000 (if I'm lucky) but things will "even out" in a year or so.

Bottom line: Back to Leasing... I will never finance again.

Well there's a few things you need to understand regarding Depreciation for the cars. Depreciation on cars is very aggressive, what is called in the accounting world the double declining method. It is understood that as you drive the car the depreciation expense perse covers for the time you've driven it and the miles / wear and tear that comes with those miles. The first year you will always owe MORE than the car is worth. You'll OWE MORE the minute you walk out of the dealership compared to the book value; given the assumption that you put little down and are financing it.

Now that it's clear we'll go over GAP insurance. It's generally used by the Lessor (The Company, BMW or etc) as insurance provided by the lessee (the individual) so that if the lessee totals the vehicle, the Lessor will not suffer a loss from the lease. In Fact, insurance coverage for the GAP is strictly written out ONLY for the Lessor. So the Lessee will never recover those funds, because the car never belonged to he or she.

As far as financing a vehicle is concerned, the assumption is that you understand that you will pretty much always owe more (unless you make large payments or a large downpayment) than the book value. But its a depreciable asset, expect it to lose value. GAP insurance isn't offered by many insurance companies because if for example you purchase a vehicle for 40k and total it 2 years later and get a 26k reimbursement from your insurance agency, the assumption is that the cost of using the car for 2 years was 14k. They will not cover it because they see it as you "using" the car for free if they offer it. Some insurance companies do offer it, but its limited.

It all boils down to the downpayment, the size of your monthly payments and the term. If priced correctly you shouldn't be in TOO much of a hit if your car is totaled and its your fault. But if you don't put a downpayment and have a long term financing, the depreciation will go MUCH faster than the principal portion of your loan and you will be hit with a big loss if you total it.

Either ways though its a car... Expect it to lose value.

[Bimmer-Bob]

I only put about 10% down, but I also got a discounted price through Military Sales and only have a 48-month term loan, so I don't think I've EVER been upside down on my loan. But I got GAP coverage anyway - partly because I didn't totally think it through, but also because you never know and I wanted to CYA just in case.

[NYF32DRIVER]

Originally Posted by Guildenstern

Glad you find this amusing... in most cases it makes little financial sense to put money down... especially for a Lease.

[NYF32DRIVER]

Originally Posted by chesterfan1230

Well there's a few things you need to understand regarding Depreciation for the cars. Depreciation on cars is very aggressive, what is called in the accounting world the double declining method. It is understood that as you drive the car the depreciation expense perse covers for the time you've driven it and the miles / wear and tear that comes with those miles. The first year you will always owe MORE than the car is worth. You'll OWE MORE the minute you walk out of the dealership compared to the book value; given the assumption that you put little down and are financing it.

Now that it's clear we'll go over GAP insurance. It's generally used by the Lessor (The Company, BMW or etc) as insurance provided by the lessee (the individual) so that if the lessee totals the vehicle, the Lessor will not suffer a loss from the lease. In Fact, insurance coverage for the GAP is strictly written out ONLY for the Lessor. So the Lessee will never recover those funds, because the car never belonged to he or she.

As far as financing a vehicle is concerned, the assumption is that you understand that you will pretty much always owe more (unless you make large payments or a large downpayment) than the book value. But its a depreciable asset, expect it to lose value. GAP insurance isn't offered by many insurance companies because if for example you purchase a vehicle for 40k and total it 2 years later and get a 26k reimbursement from your insurance agency, the assumption is that the cost of using the car for 2 years was 14k. They will not cover it because they see it as you "using" the car for free if they offer it. Some insurance companies do offer it, but its limited.

It all boils down to the downpayment, the size of your monthly payments and the term. If priced correctly you shouldn't be in TOO much of a hit if your car is totaled and its your fault. But if you don't put a downpayment and have a long term financing, the depreciation will go MUCH faster than the principal portion of your loan and you will be hit with a big loss if you total it.

Either ways though its a car... Expect it to lose value.

I understand the instant depreciation issue... I was mentioning that for the "benefit" of others... it's the OTHER issues that really trouble me.
However, I do appreciate you taking the time to give me your view of the situation.

[Angry3]

Originally Posted by NYCE90DRIVER

I understand that but everything I have read advises AGAINST getting it from the dealership...

Right, because GAP policies are marked up by the dealer and can be obtained cheaper somewhere else. That advice has nothing to do with the decision to obtain GAP coverage itself, whether it's advisable depends on the individual situation. And if I were in yours, I would be looking to obtain GAP coverage as soon as possible

Originally Posted by NYCE90DRIVER

Down payment ? Whats that ? I have never and will never put a penny "Down" on a car. I only financed because of the 0.9% and had to roll 6 payments from the previous car into it. I did not intend on keeping the car longer than 2-3 years anyway. The sticker price of my car was $48,000 ! It's in perfect condition. Now I'm told its only worth 34,000 (if I'm lucky) but things will "even out" in a year or so.

Bottom line: Back to Leasing... I will never finance again.

Not sure why you're now hostile to financing, the lease vs. finance decision is just a matter of comparing the projected expense of the use of a car over a given period based on the current residual/expected value and cost of funds for both options. Anyone saying one option is inherently better just doesn't understand the costs and benefits of each IMHO.

I just don't see where the surprise and frustration is coming from here. When you buy a new car and roll thousands of dollars of negative equity into your loan you're going to be upside down for most of the loan term. In your case, you're most likely going to have to write a check or roll negative into your next car even if you keep the car for 3 years. That problem has nothing to do with your decision to finance instead of lease.

Thankfully it's a problem that's easily solved. You have an awesome car, resist the urge to get something different, keep it and enjoy it for another 3 or 4 years. Then look for a good lease deal since you like to change cars frequently.

Good luck to you, hope things work out.

[titancrusher1]

There are some real benefits to financing a car if you have a pasion for it. I intend to keep my car for the life of it. i'm on my first year with 15k miles. That means worst case i will put 75k on my car after 5 years. PLENTY of life will be left in the car for me to pass on to my other hafl as an around town car rather than spend the money on another car at that time. I will saythough, i'm definitely getting the extended warranty/maintenance.

[NFIDDY5]

I got the GAP coverage through BMW Financial, who is also who my loan is through. And GEICO couldn't hold a candle to Progressive. I pay approx. $65/month for my 135i with $300,000/100,000/300,000 coverage. Full glass replacement and a $500 deductible.

I don't know much about each GAP coverage, but through BMW, they cover the entire amount of the loan if the car is totalled. None of that depreciation BS that most providers rip you off with. Progressive only covered 25% of the remaining balance of the car's value. And I am sure most insurance giants are the same.