GAP Coverage Plan | Albertville AL | Near Boaz, Guntersville, Scottsboro, Rainbow City & Gadsden

Every dollar insured

Do I Need GAP Insurance in Albertville, AL?

You may be wondering the answer to that question yourself, or perhaps one of our experienced finance advisors just asked you if you’d like to have additional coverage with your new Toyota purchase. Our hope is no matter what your decision may be, that you’ll know what GAP insurance is, how it can benefit your finances and what your next steps are here at the finance office of Sand Mountain Toyota!

What is GAP Insurance?

Here’s what you need to know: GAP insurance, or General Asset Protection insurance, is the additional coverage that some overlook at signing, but is vital in covering the gap between what you owe on your loan and what your car is worth. Make sense? Let’s say you got into an accident with your new Toyota. Your insurance company will only cover what your Toyota is worth, not how much you still owe on your loan. If you still owe $3,000, for example, you’ll have to pay that amount to your lender. Not so with GAP insurance — it will close that financial gap, ensuring that you’ll be covered no matter what your outstanding loan balance may be.

Let’s Look at the Numbers

New car price $50,000 | Loan balance after one year (4% APR/5 year loan) $24,000 | Actual cash value after one year $20,000 | Insurance payment without gap coverage $20,000 | Deficit $4,000 | Gap insurance payment $4,000

Table from WalletHub’s “Gap Insurance Guide” article. Click for more details.

When Would GAP Insurance Apply to Me?

Not everyone needs GAP insurance. So how do you know when it’s best to purchase the extended insurance plan?

If you paid a low down payment and took out a large loan.

A small down payment will result in a larger loan, which will further increase the gap between what you owe on your model and the car’s depreciated value.

If your loan terms are fairly long.

According to Edmunds, the average car loan is now 70 months long, most being 72 months, and some even reaching upwards of 84 months. The more time that you have to pay off a loan, the longer that it will be for your loan payments to catch up to your vehicle’s depreciating value.

If you purchase other service plans or add-ons at signing.

Adding more fixtures to your loan like extended service agreements, debt from a previous auto loan or dealer-installed options will only increase what you owe on your model without actually increasing its value.

If you know your car will depreciate quickly.

The quicker your vehicle depreciates, the more likely that you’ll owe more on your model than it’s worth. Check out reliable sources like Edmunds and Kelley Blue Book® to research the estimated depreciation rate of the models that you want.

If your model has high mileage.

High mileage on a vehicle can speed up its depreciation, so if you’re driving more than 15,000 miles per year, you should consider purchasing GAP insurance.

If you leased your car.

Since lessees pay less on principal every month with their lease payment, many leases include GAP coverage automatically.

If you’re interested in learning more about GAP coverage or would like to purchase a new vehicle, contact us or stop by Sand Mountain Toyota at 9167 US Highway 431, Albertville, AL 35950. As always, we look forward to serving our customers from Boaz, Guntersville, Scottsboro, Rainbow City and Gadsden.