Gap Insurance - anyone used it ?

[Laidback]

Again, Comprehensive cover, agreed value or market value, covers the car not the loan payout.

My whole point is that you don't presume, because you don't have a crystal ball and you simply don't know when you can have an accident.

The loan payout figure is not determined by the agreed value of the car.

I hope these may help:

http://www.youtube.com/watch?v=mmH10UVC_gc

https://www.thetaoofmakingmoney.com/2007/08/03/457.html

https://www.encyclopedia.com/.../j3puFPKDdM0-gap-insurance-recommended-automobile-owners.aspx

http://www.youtube.com/watch?v=79GdIQvyFc4

http://www.youtube.com/watch?v=8WrnQINfITA (she's irritating but fast forward to 3 min 40 sec's)

[bigmouthmedia]

Laidback, where is the $200 figure coming from ? Peace Of Mind insurance's cheapest is $795 for $10000 cover !

[Dubya]

Laidback, where is the $200 figure coming from ? Peace Of Mind insurance's cheapest is $795 for $10000 cover !

Hardly surprising; insurance of last resort for desperados. Of course the 3% who claim for a total loss are delighted, as Laidback can attest.

Again, Comprehensive cover, agreed value or market value, covers the car not the loan payout.

But both if the sum insured is > or = the payout figure.

My whole point is that you don't presume, because you don't have a crystal ball and you simply don't know when you can have an accident.

(No, you never know, but with lines like that, you could sell insurance.)

But, no kid . . . so you find out your payout figure before renewing your insurance each year and obtain cover for an agreed value > payout.

Someone who cannot get that coverage has either:

- over paid for the car;
- borrowed from GE Capital and the likes at very high rates; and/or
- over-extended,

or all of the above.

Either way, they should not have financed the car in the first place.

As a rule of thumb I would say that unless one can claim a majority of the car's running costs (incl interest & depreciation) as a tax deduction, or borrow at close to the home lending rate, one should not finance a motor vehicle with a loan the borrower cannot expect to repay within about 12 months.

The loan payout figure is not determined by the agreed value of the car.

You don't say. How could it be?

So insure for an agreed value up to the payout figure.

But avoid expensive gap insurance which takes excessive premiums from the most vulnerable. The same class of consumer that has to take out home mortgage insurance.

It happens to starry-eyed consumers every day - act in haste, repent at leisure.

Sorry to be a killjoy, but abstinence is better than consumer finance at usurious rates.

[Laidback]

I'm not here to sell anything; I'm just providing an point of view which is different to others. And as you would have read I'm not having a crack at that point, as I see everyday most peoples' priorities and budgets are different.

GAP Insurance serves a practical purpose otherwise it would not sell or be re brought time and again. I have included it in all my loans, but as I said I'm not going to covince those .5 for reasons previously mentioned or debated here.

The irony is that an agreed value is more than a market value premium, and the diffrence in cost, (which would be coins in the jar) doesn't out weigh the benefit of all extra cover that will be a benefit at time of write off.

The $795 for 10K is a 'once off' premium (not payable every year) that will cover the term of the loan, which due to budget restraints are commonly 5 years. Therefore $795/5 years with that scenario is @ $160 per year.

Obviously that averages to be more; the less the loan term is, but shorten it more than 3 years and the risk is worth looking at taking if you can't afford the extra couple of hundred a year.

The fact is people need car loans for many reasons most notably for work purposes and expanding families. They banks will decide if a client can't afford a loan after they are approached.

There's nothing to be cynical about; it's pretty straight up, take it or leave it.

It is expensive to be a tight arse.

[bigmouthmedia]

But a question I posted earlier needs answering.....does it have to be taken out at the start of the loan, or can it be done a bit later) when there is a bit more capital ?

[Laidback]

Most companies insist that it is taken out at the time of purchase. But others you can get away with 2-3 weeks after (POMI).

However, the message so far is that it has to be pretty close to the delivery date. I know they are working on extending that, but it will take time.

Please feel free to contact me either via here or direct if you need any more help.

[bigmouthmedia]

Another query...I'm likely to be selling a house this year but as to when I don't know. I'll most probably knock the rest of the loan off with some of the capital, so is there value in setting it up until then ?