Do Need to Buy GAP Insurance for Used Cars in Taylors?

Along with the traditional car insurance that you will have to buy before you can drive your used car in Taylors, the agent will also talk about something called GAP insurance. You will hear that GAP insurances are very handy if your car gets totaled within a year of taking possession and you will not have to pay a dime to pay back the auto loan you just took. Although convincing, this narrative holds for new car buyers where the amount initially paid is comparably hefty. But when it comes to buying dealer cars, especially used, you might have to think again.

GAP insurance and new cars

New cars depreciate fast. It loses 9-11% of the price you paid right after you drive it out of the dealership and a further 10% over the first year. So, if your new car costing $30,000 is totaled just after a couple of months, you will get back $27,000 from the insurance company as per the current valuation of the car. If you have taken an auto loan for 60 months or 5 years, you will still owe over $2,000 to the lender. The condition is called being upside-down and the difference is covered by GAP insurance.

GAP insurance and used cars

Used cars lose most of their dollar value by the time you buy them in a dealership. Depending on the model, mileage, age, and a few other factors, the rate will differ. However, a typical used Nissan of Greenville, SC depreciates almost at the rate of 50% over 5 years, and then the figure flats out. So, if you buy a used car today at $15,000 and pay the same loan premium of $500 a month, you will rarely be in an upside-down condition over the next year in case the vehicle is totaled.

You can safely assume that you will not need GAP insurance if you purchase a used vehicle from a top buy here pay here in Greenville, SC. And the dealership matters because of the next aspect.

Being upside-down with used cars is possible

1.If you buy a pricey used car and pay a low down payment
2.And, if you take an extended auto loan, say for 84 months

The first will increase the auto loan amount and the second will hike the interest payable on that amount. The overall result will be a huge sum that you will owe to the lender. In such a scenario, you may be in an upside-down situation if your car is totaled soon. And thus, GAP insurance might just protect you.

However, you can choose to not incur the extra insurance expense altogether. Pick reputed bad credit car dealerships in Greenville that offer short-term loans, pay a size able down payment and buy a used car within your budget. Remember, GAP insurance is not necessary for used cars and you can keep it that way.