5 ms·

If you get a loan on a vehicle also get GAP insurance. It's stupid cheap, $10-20/mo. I had a car stolen and totaled that I owed $26k on. USAA, who were absolute

• cityofdelusion 3y ago
  I work in insurance. Local cash value is normal. It’s not a Craigslist lookup, it uses industry standard published tables and is the same across all companies. People are frequently shocked that they are underwater on their cars so much, but it’s worth what it’s worth, car insurance has no reason to cover loans. As you found out, GAP is insurance on the loan itself, most lenders will strongly encourage GAP coverage or even mandate it.
  • mysterydip 3y ago
    where do they get the data to publish in the industry standard tables?
  • swozey 3y ago
    There was absolutely no way I could walk into anything but the most decrepit used car dealer and walk out with a car anywhere near what I previously owned for what they gave me, completely unrelated to whether or not I had a loan. The KBB was around 20k dealer. They gave me the crumb not fully loaded non F-sport (a $5k package) private party low end. $15k was shockingly low. Mine had like, 15k miles and the 15k range had over 100k. Their criteria seemed to be "Lexus I of some sort, cheapest." I don't think the IS250 was even normally that low. Maybe it's what they all do, but it sucks. And it's not what a lot of people expect.
    • magicalhippo 3y ago
      We had our i3 totalled a few years ago. Insurance company guy was transparent and said he'd gone to our version of Craigslist here in Norway, found i3's of same age and similar milage, and took the average. As such I could definitely buy a replacement with the payout. While I'd much rather be without the experience, I was almost pleasantly surprised by the insurance company.
      • bombcar 3y ago
        That’s what progressive did when our older car was totaled by hail. It wasn’t just Craigslist but it was some similar ones available- and averaged. They’d go buy one for us, or give us the cash, or (what we did) is give us back the car and most of the cash.
    • brendoelfrendo 3y ago
      You may have been able to push for a better settlement if you saw their comps and noticed they were not actually comparable, but at the end of the day, no insurance company will give you more than local market value. If you're underwater on the loan and the value doesn't cover it, that's om you. I never buy GAP; if you need to buy GAP, you should be buying less car.
      • swozey 3y ago
        Yeah I really had no idea what powers/options I had in the situation. The way they treated me made me seriously want to somehow get them to recover a LOT of money I had to spend (around $4-6k in impound lot fees they wouldn't pay). They pretty much went out of their way to make me feel like I should be grateful they helped at all. I was maybe 23 and definitely didn't have money for legal help. I hate how I let myself get treated.
  • l33t7332273 3y ago
    It seems like the industry has some pretty strong incentives to standardize on the lowest possible values in those tables. Further, what does “worth” mean if you can’t take the amount of money you were given and easily purchase a car of the same make, model, year, and condition?
    • FireBeyond 3y ago
      Particularly when you add on them keeping your car and parting it out or whatever. I got screwed on that pretty hard... they "forgot" to document all the options and packages (my car was intact, generally, but totaled due to airbag deployments). Even tires (look, I am realistic, I don't expect that to account for much)... I'd just put new performance tires ($1,700) on them 400 miles prior (yay for the odometer reading on the receipt) and they weren't affected by the accident, but the adjuster looked at a scale of "New / Like New / Excellent / Good / Fair / Poor" and described them as in "Fair" condition. When I balked at that they upped the offer by $60, $15 a tire. If it wasn't for all the drama associated with it, I'd have bought the car back and parted it myself.
  • switch007 3y ago
    where does the data in those “published tables” come from?
  • FireBeyond 3y ago
    I had a two year old Audi A4 totaled. I expected that I'd get about $24K for it (this was a couple of years ago). My insurer offered $19K. I asked to look at the comps, and sure enough, most of the comps were between $22K and $27K. Except one, from a shitty little dealer 150 miles away for $12,999. There was obviously something up, salvage title, or some other issue. But they shrugged. "Doesn't say so on the offer, so it's a valid comp". My two cars now have new car replacement coverage for 5 years that also wraps in gap coverage.
  • ultrarunner 3y ago
    It absolutely is a local craigslist lookup— I followed up with one of the dealerships USAA called (6 hours away from where we live, with all of four cars in their "lot") to clarify how their valuation was provided. They explained that Vanessa (the USAA agent) simply asked how much they would sell a VW TDI for if they were a VW dealership. The high-school aged secretary said she didn't really know, so agreed that whatever value Vanessa offered sounded reasonable. This was the value they were willing to pay when their drunk client smashed through my parked car in the middle of the night in his BMW on the way back from the opera. "Industry Standard published tables" must just be the title on the top of the sticky note from her calling around. The whole thing was an absolutely miserable experience completely stacked against any sort of reasonable resolution, and USAA was caught in so many lies it still irritates me years later. I'm sad that this is so clearly a continual process for people day to day.
    • swozey 3y ago
      Lol, wild. Mine was also a drunk lady slamming into my parked car. I had absolutely nothing to do with the theft and accident at all. And I was treated that way. I was actually out drinking for my birthday and my car was parked (downtown where I lived) next to a bar my friend worked at and he called me.
• thedufer 3y ago
  Gap insurance covers a tightly-bounded amount of loss (it will never pay out more than the remainder of your loan), which is why it's so cheap. That's also why it's a great target for self-insurance - you know exactly how much you need to have to cover the worst-case loss. If you have the cash, you are almost certainly better off skipping this one.
  • bombcar 3y ago
    If you have the cash you might as well just skip the loan, unless it’s unconscionably low.
    • kube-system 3y ago
      For new cars you can sometimes get really low loan rates that are lower than inflation. IMO it's basically free money to take out the loan.
• silexia 3y ago
  I also had a terrible experience with USAA. I don't know what happened to them, but it is a rotten company now. I switched to Country Financial recently as I can at least talk to a person without a nightmare phone tree there.
• SoftTalker 3y ago
  A bit of a tangent but this is one of the biggest reasons I don't buy new cars. The depreciation in the first few years is astonishing. You are immediately underwater and will be until you've paid off at least half the loan balance (this is not the same as paying half the payments).
  • acjohnson55 3y ago
    My previous car was new, but only because we were buying a minivan and there were significant new safety features just introduced. But totally agree that buying used makes sense if there's not a significant difference in functionality.
  • nktrnk 3y ago
    There are brands (and probably is market dependent too) where this isn’t always true. Where I live, a 3 year old Toyota or Honda costs 10-15% less than a new one. In that case, it doesn’t really make sense to buy a used one if you can afford it. Still, I also buy cars used. But I go ~10 year old, from a reputable low maintenance brand and model.
• kube-system 3y ago
  My personal opinion is that if a vehicle's loan value would ever exceed the value of the car, you can't afford it.
  • darkerside 3y ago
    Well, your car's value plus your disposable assets. But I agree. A lot of these problems are solved by not buying such expensive cars.
    • kube-system 3y ago
      Being expensive is not so much an issue as it is buying a car that will depreciate faster than it can be paid for, because that's how people get in over their heads. It's not just expensive cars, people are putting tiny down payments on cheap new cars financed for long terms and they're under water for years.
      • swozey 3y ago
        Not everyone buys a car to sell their car though. Some of us buy vehicles to keep, collect, race, trade, etc. I could not care LESS what the value of my 2 sports cars is in 15 years unless it soars to the moon for some reason and I become a millionaire. This isn't /r/frugal fwiw.
        • kube-system 3y ago
          I know, I have a few vehicles without plates in my garage :) I’m talking about the people buying cars for transportation who are in a financial situation for which GAP insurance might be a concern.
  • sokoloff 3y ago
    Unless you’re going to put 40% down, you’ll have a day when the loan balance exceeds the value of the car. My last car loan was at 0% (meaning the only cost of financing was the insurance company profit on the collision policy that I had to take because of the loan). No way am I putting down 40% on a 0% loan. I could have charged the car on my credit card for the points and paid it off 45 days later; it’s not a matter of being able to afford it.
• Glyptodon 3y ago
  If you want no replacement, replacement value, or loan value it's pretty clear that those or separate coverage and options. It sounds like you just got the wrong level of coverage and blame USAA for that more than anything. TBF, if you used them for the loan, I'd kind of question the proper insurance not being suggested at purchase time, but if not... it's kind of on you.
• derekdahmer 3y ago
  FWIW, I have USAA and had the almost exact same thing happen to me in 2020 - car stolen and totaled. They paid me a really fair deal on the cash back for the 2yo crosstrek. It probably helped that it was a cut and dry case - the thief took the keys from inside my house and I called the cops seconds after I saw him drive away with it.