Question
If my car is determined a total loss in an accident, will my gap insurance cover the down payment used to secure my loan?
I recently purchased a used car for $5,500. I made a $1,000 down payment, getting a loan of $4,500 at the bank. Will my gap insurance cover the thousand-dollar down payment?
Answer
Gap insurance will only cover what is left on your loan after an insurance company pays out. Gap coverage is best purchased if you are going to have a difference between the loan amount and the value of the vehicle. If you are putting money down and the vehicle value is more than the loan, then don't buy the gap because you won't ever benefit from it.
Hope this helps!