When you buy a car, you also need proper car insurance to protect yourself—plus, it’s the law. While you may think it’s smarter to save money and get the most basic insurance coverage, there are certain types of car insurance you should consider adding, as they could end up saving you tons of money down the road.
One such coverage is gap insurance. Our Chrysler dealers at Bemidji Chrysler Center, near Bagley and Fosston, are happy to share more information with you about what it is and why you may need it.
What Is Gap Insurance?
Consider this: You buy a new car for $15,000, and get a car loan. As soon as you drive off the lot, however, your new car will depreciate in value, sometimes up to 20% in the first year, so $3,000 in this case. This could put you in a position where you owe more on the car loan than the car is actually worth.
If your car is then totaled or stolen, that difference of what’s owed and what the car’s actual value is what gap insurance covers.
Who Should Have Gap Insurance?
If you decide to finance your car, gap insurance is probably a good idea. However, as you continue to pay off the car and near the end of the loan period, the balance of what you owe and your car’s worth will start to even out, and eventually you’ll owe nothing and the car will still be worth something.
But until that point, gap insurance coverage can protect you in the event that something happens to your vehicle.
If you have more questions about insurance options or financing a new RAM 1500 or a 2019 Jeep® Cherokee, get in touch with our our Bemidji Chrysler dealers today.