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My understanding is GAP insurance only comes into play if the car is written off (and makes up the difference between what the car was worth and what the insure
by cjrp 9y ago
My understanding is GAP insurance only comes into play if the car is written off (and makes up the difference between what the car was worth and what the insurer pays out). I didn't think it was designed to cover any shortfall in the hand back price?
- deleted 9y ago[deleted]
- kemiller2002 9y agoThis is the way I've seen it too. It may not be everywhere now, but it was meant to be a safety net in the event that a car was totaled and you still owed the finance company money. For the finance companies, this was essentially free money. Of course they ran loss statistics on it to make sure that it was in their favor, but I did see it save people from a really bad situation. My coworker, driving to work one day got hit and totaled his car. He actually got his car loan at the company we worked for before he started working there. They just wrote off the car, and he was able to go and get a new 0% interest loan. Total win for him. This is the exception not the norm though.