What do you guys think about "GAP" auto warranty? Should i cancel this extra bucks?


#1

What do you guys opinion when the car sale/finance person convince you to buy something like this at the dealer (see below) , it’s my mistake that i didn’t think about it enough before i bought this, it’s kind of like gambling. I want to cancel if i can. This offering from Toyota, not sure if other car type offer or not.
“Get a grip on GAP
Here’s how GAP works: In the event of a total vehicle loss, GAP covers you once insurance has paid its share, paying the difference (or deficiency) between your Toyota’s insurance payment (usually market value) and the balance on your finance or lease contract. GAP will also pay up to $1,000 of your AUTO INSURANCE deductible (if applicable) in most states.”


#2

On general principles, I would NEVER buy insurance (that is what GAP is) or extended warranties from a dealership. They are VERY high profit items for the dealer.

If you financed your car for more than 3 years, you bought too much car and put yourself into this risk of being upside down on a car loan so now you need to consider taking GAP.

I wouldn’t do it because the risk of totaling a car is rather small but this assumes you have not already totaled at least 2 cars AND your loan term is greater than 3 years. Then, the odds are against you and you probably should pony up for GAP.


#3

In general, lenders who finance cars have their own gap insurance to over them if a loan is upside down. They have one blanket policy on all the cars securing loans with them. Ask. They will probably pretend they don’t know what you are talking about.


#4

Planning on losing your vehicle in an auto accident? No? Than cancel the gap insurance.


#5

Its just like any other kind of insurance, you don’t necessarily want to use it but sometimes nice to have. Also you can pay a lot or pay less for it, depending on if you buy it from the dealer or a credit union. So it just depends on your level of risk and ability to cover a loss yourself. If you end up having the car stolen or wrecked and the value is $5000 less than what is owed, are you OK with paying the $5000? After a couple years of payments, generally the two will be more equal but the longer the payment term, the less you are paying off as the car depreciates.


#6

OK, here is my 2 cents worth.
I never buy extra insurance on purchases EXCEPT GAP insurance.

I have seen it on countless occasions where a vehicle gets totaled and the owner states they still owe on it. Most shops wont repair a totaled vehicle so you then go car shopping for one vehicle but your paying for two.

I have also heard from several vehicle owners that their car is totaled and they have not even made a payment on it yet, or made one payment, etc.

The same mountainbike asks, Planning on losing your vehicle in an auto accident? I hear where he is coming from but does anybody jump in the car to run an errand and decide instead to have a vehicle accident? No one plans on this.


#7

I purchased GAP ins on one vehicle, it was a lease that I had because of employment requirements at the time. I was on 24 hr call no matter the weather. I was just over 3 years from retirement . For the price it gave me peace of mind. We did not get it on our last vehicle. I also think the initial price of the vehicle would have some bearing on the decision.


#8

I’ve always felt like gap insurance was the dealer’s way of telling you that you just got screwed.


#9

Depending on how much you put down if any Gap insurance is a good thing to have, Your insurance company probably will offer it for much less than the dealer charges.


#10

It’s just a piece of mind, the dealer just convinced me a lot of things and it’s tough to make the decision at the moment without doing a good research, they also offered me for additional 5 years warranty for $2100 for some maintenance but i decided not to buy it. I think the dealer think that i am dump that i should buy it. It’s new car and it has some warranty on it. I am glad it’s over with buying car process.


#11

The vast majority of vehicle warranties, including gap insurance, are not worth the paper they are written on. Just so you know.


#12

Gap insurance is the latest SCAM from dealers. It’s NOT worth it. It’s like an extended insurance beyond your own collision insurance. Don’t waste your money.


#13

I am with you on that.


#14

I’ve never bought gap insurance, but I’m a careful driver and I keep my vehicles for a long time. If you totaled your last car, gap insurance might be worth it.


#15

Another thing to consider is how well your car holds its value. If your car depreciates fast, gap insurance might make sense. Gap insurance only pays if you’re upside down in your loan and owe more than the car is worth.


#16

Well like I said, the dealer policy will be more expensive than it would be from a credit union but its only a scam if they have no intention of providing the coverage. It might be cheap or expensive coverage, and needed or not needed depending on your finiancial situation. Worth it or not depends on your own situation but you can get a better deal from other than the dealer. Maybe the same as a $500 wax job but maybe not.

Years ago I bought a mortgage policy too for a 15 year mortgage. Knowing full well it is expensive because it is basically declining term coverage. I canceled after five years because the house value was double the mortgage and didn’t need it anymore with other compensating death benefits. Yes it was a couple hundred a year but provided a little extra protection for the family at a transitional time when it was important. Had I killed myself on the freeway, the house would have been paid for. Scam? No. Expensive? Yes, but served a purpose and my eyes were wide open.

I like insurance because I’m superstitious in that if you have it, you’ll never need it. So I’ve always had car, life, renters, home owners, disability, and health insurance and have lost money on all of them. Never needed gap insurance though. The only car I ever totaled was worth $400 and I owed $250 on it. So the insurance paid it off and gave me the $150 to buy another one (wish I still had that 59 Pontiac). I’ve never collected on life insurance though.