We all know how easy it is to buy a car on finance these days, in fact it is totally possible to walk into a dealership and drive out in a brand new car without having to part with any cash at all. It is this very fact that increasingly is becoming a serious problem for some drivers.
For example you pick up your brand new car and drive it out of the dealership straight away the value of the car has now dropped by thousands of dollars, so what happens if you get around the corner and have an accident, the car is totaled and after an inspected is written off as the damage is far to great to even consider getting it repaired.
The insurance valuation is not going to be anywhere near the price that you have paid for the car, and to make it worse you had taken out finance, so with this all taken into consideration the insurance will make an offer, but this is not gong to clear the finance and as in many cases now days there is going to be a shortfall of several thousand dollars, of which you will need to pay.
However thankfully there is a solution to this headache, Gap insurance is product that will cover the difference between what the loan company want as a settlement and what the insurers are willing to pay up for the car. The price of this gap insurance varies as you would expect, but it can start at around $150 and rise up around $500, but whatever the price, for the first year it is worth paying for Gap insurance. The only other alternative is to pay a decent sized deposit on the car.