Do I Need GAP Insurance in Memphis, TN?
Do I Need Gap Insurance in Memphis, TN?
We’re glad that you asked. Considering additional insurance for your new Toyota purchase or lease is always a good idea, and we hope that by the time you’ve finished this page, you’ll be confident in your decision. Chuck Hutton Toyota has helped many customers from Memphis, Southaven, Whitehaven and the Goodman Road area decide whether GAP insurance is right for them — why not join them today? Keep scrolling to learn exactly what GAP insurance is, how it can help and whether it’s right for your budget.
What is GAP Insurance?
GAP insurance, or General Asset Protection insurance, is coverage for the difference between what the car is worth and how much the driver still owes on their car loan or lease (according to Car and Driver ). Everyone is required to purchase automotive insurance; GAP insurance is superlative coverage that is highly recommended. It would be immensely helpful for when your car, truck or SUV is totaled in an accident but you still owe money on your model. While your insurance company will only cover what the vehicle was worth, they will not cover the amount that you still owe. GAP insurance closes the gap between those two numbers. Need more details? Look over the table below for an example.
Let's Look at the Numbers
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 larger loan amount due to a small down payment will further increase the gap between what you owe on your loan and the car’s depreciated value.
If your loan terms are fairly long.
With the average car loan now reaching 72 months (according to Experian Automotive), drivers have more time to pay off their loan, but it will take longer for your loan payments to catch up to your vehicle’s depreciating value.
If you purchase other service plans or add-ons at signing.
Additional fixtures like an extended service agreement, debt from a previous auto loan or other dealer-installed options will only increase your loan amount without actually increasing your vehicle’s value.
If you know your car will depreciate quickly.
It’s more likely that you’ll owe more on your car than it’s worth if it has a high depreciation rate. Do your research with sources like Edmunds or Kelley Blue Book® to get an estimate of the depreciation rate of the models you’re interested in.
If your model has high mileage.
High mileage will only speed up your vehicle’s depreciation. If you’re driving more than 15,000 miles per year, you should consider purchasing GAP insurance.
If you leased your car.
GAP insurance coverage is sometimes applied automatically to leases since you’ll pay less on your loan’s principal every month. Ask us if your lease will include GAP insurance!
If you're interested in learning more about GAP Coverage or would like to purchase a new vehicle, contact us or stop by Chuck Hutton Toyota at 4601 Hutton Way, Memphis, TN 38116. As always, we look forward to serving our customers from Southaven, Whitehaven and the Goodman Road area.