Is Gap Insurance on cars worthwhile?

GAP

It all depends on how big of a downpayment you make, and how popular your car is. The more popular your car is, and the more people buy it, the better off the market value of your car will be over time. GAP is really for piece of mind, so if you're concerned about being in a crash and it gets totaled, get GAP. When I bought my toyota last year, I put such a big downpayment on my car that GAP wasn't needed. In the end, it depends on how much you've financed. If you go to a dealership and opt for a $17,000 vehicle, (let's say current market value is $16,500, because dealerships always sell above market value to make a profit), put lots of options on the car (remember options add some value to car, but not too much). You put $3,000 in options on the car, which brings your total up to $20,000, current market value this time being $18,500. Let's not forget taxes, so a $20,000 car now costs 21,550. This doesn't include any interest you'll be paying each month. You put 1,550 down, financing for 20,000. At this point, you would owe 1,500 on your contract if your car were to get totaled. At $300/month with interest, it would take some time for the loan balance to get lower than your market value, if it ever does. This is why residual market value is key. Do some research and read the reviews for the car you want, ask around etc. Furthermore, know what you can afford, and what you can't. Go easy on options. Ask yourself "Do I really need a GPS system or 6-disc changer?" Anything you agree to or purchase for your car will be added to that loan balance on your contract.

First answer by Mothra820. Last edit by Mothra820. Contributor trust: 340 [recommend contributor]. Question popularity: 12 [recommend question]