WHAT YOU NEED TO KNOW ABOUT GAP COVERAGE | MCLARTY DANIEL BUICK GMC

There’s a lot to think about when buying a new vehicle, including your budget, what you can afford, what options you need, safety features and more. One of the biggest concerns — and one which most people don’t give enough consideration — is making sure you’re financially covered if something goes wrong, including so-called “Gap Insurance.” Whether you’re buying your first new vehicle or your fiftieth, Gap Insurance — A.K.A. Gap Coverage — should definitely be on your radar. McLarty Daniel Buick GMC is here to help you understand this crucial financial protection.

What is Gap Coverage and how does it work? The “gap” in “Gap Coverage” is actually an acronym for General Asset Protection. Simply put, Gap Coverage is insurance to cover the difference between what your vehicle is worth and…

what you still owe on the note. You see, the moment you drive a new vehicle off the lot, it is subject to what is known as depreciation, creating a sometimes sizable difference between what you paid for that vehicle and what you could immediately sell it for if you wanted to try.

Depreciation is normal when purchasing a new vehicle, and shouldn’t be seen as evidence that you “paid too much” or didn’t get a good deal. It’s just part of buying a new car and has been since the days when Henry Ford was building Model Ts.

The issue is: if you are involved in an accident that destroys or “totals” your vehicle within the first year or so of making payments, the appraised value of the vehicle may actually be less than what you owe on the loan — sometimes much less. If that is the case, when an insurance company cuts you a check for the appraised value of the vehicle that was destroyed, there can be a significant gap between what you’re paid by the insurance company and what you still owe on that vehicle. For example: if you paid $35,000 for a new SUV and are involved in an accident four months later that totals that vehicle, you might only get a check that covers $26,000, even though you still owe $31,000. That $5,000 difference can be a sizeable financial burden, and can actually make it impossible to buy a vehicle to replace the one that was wrecked.

That’s where Gap Protection Coverage comes in. Available for purchase through the dealership or your car insurance company, gap coverage pays the difference between what you owe and what the vehicle is worth due to depreciation in the event of an accident that “totals” in the vehicle. While you might not need it if you make a large down payment, chances are you will, at least for a few months. Many lenders these days actually require buyers to purchase gap protection when buying a new vehicle just because the risk is too great otherwise.

Nobody likes paying their hard-earned money for insurance coverage you might never need, but when it comes to buying a new car, gap insurance is an absolute necessity. Not only will it give you peace-of-mind while driving your new vehicle, it can save you and your family from having a vehicle accident compounded with a resulting financial calamity that could leave you taking the bus.

McLarty Daniel Buick GMC understands that the process of buying a new vehicle can be confusing, but we’re here to help! If you’re looking to buy a new Buick or GMC in Northwest Arkansas, stop in today and talk to one of our friendly finance professionals, who can walk you through all aspects of buying a vehicle, and help you avoid costly gambles and pitfalls that could wind up costing you a bundle. Come see us today, or check out our full selection of quality GMC and Buick vehicles online right now. .

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