Gap Insurance Options In South Carolina

Gap insurance, or guaranteed asset protection, is available in South Carolina. It covers the difference between your vehicle's value and the remainder of your loan if your car is stolen or involved in an accident that totals your vehicle. While it is not required by the state, your lender might require you to have it. You can purchase gap insurance from your insurance company or a third-party company, or through your car dealership, though it may be more expensive through the latter.

Gap insurance covers the difference between your vehicle's value and the remainder of your loan if your car is written off or stolen

Gap insurance is an optional auto insurance coverage that covers the difference between your vehicle's value and the remainder of your loan if your car is written off or stolen. It is designed to protect you from financial loss in the event that your car is declared a total loss.

When a car is written off, the insurance company will pay out a maximum of the car's actual cash value (ACV), which is the car's retail value on the open market. However, if the amount you still owe on your car loan is more than the ACV, gap insurance will cover the remaining balance, ensuring that you do not have to continue making payments on a car you no longer possess.

Gap insurance is particularly relevant for new vehicles, which can depreciate by up to 10% upon leaving the dealership and up to 45% in the first year of ownership. It is also a good option for those who have made a small down payment on their vehicle and have a long payoff period, as they may owe more than the car's current value.

When purchasing gap insurance, it is important to compare quotes from multiple providers, as costs can vary. It is usually cheaper to buy gap insurance from a car insurance company than from a dealership, where the cost of the policy may be added to your loan and incur interest. Some lenders or leasing companies may also require you to have gap insurance to protect them from car owners who walk away from a loan or lease if the car is written off or stolen.

In summary, gap insurance provides financial protection and peace of mind for those who owe more on their car loan than their vehicle is worth. By covering the difference between the insurance payout and the outstanding balance, gap insurance ensures that you are not left with a financial burden if your car is written off or stolen.

You can buy gap insurance from an insurance company or a car dealership

If you're buying a new car in South Carolina, you can get gap insurance from the dealer or your auto insurance company. Buying gap insurance from a dealer can be more expensive if the cost of the coverage is bundled into your loan amount, which means you'd be paying interest on your gap coverage.

When you buy a car, the dealer will likely ask if you want to purchase gap insurance when you discuss your financing options. Buying gap insurance from an insurance company may be less expensive, and you won't pay interest on your coverage. If you already have car insurance, you can check with your current insurer to determine how much it would cost to add gap coverage to your existing policy. Note that you need comprehensive and collision coverage to add gap coverage to a car insurance policy.

You can buy gap insurance online if you don't already have an auto insurance policy or your current insurer doesn't offer gap coverage. An online insurance provider can be an effective way to request quotes quickly and find an affordable policy.

Gap insurance is more popular than you may think. According to a recent University of Michigan study, it was chosen by consumers in approximately 39% of vehicle financing deals. More than nine in 10 of those who purchased gap insurance expressed satisfaction with their decision, compared to only 1% of respondents who expressed discontent with their purchase.

You should purchase gap insurance if you made less than a 20% down payment on your vehicle

Why You Should Purchase Gap Insurance If You Made Less Than a 20% Down Payment on Your Vehicle

Gap insurance is a supplemental auto policy that covers the difference between the insured current value of a vehicle and the balance of a loan or lease. It is designed to protect you from depreciation, which can cause a "gap" between what you owe on your car loan and what your car is actually worth. This gap can be significant if you made a small down payment (less than 20%) when purchasing your vehicle.

When you buy a new car, its value starts to decrease almost immediately, sometimes by as much as 10% in the first month. This depreciation can leave you owing more on your loan than your car is worth. In the event that your vehicle is stolen or totaled in an accident, standard car insurance will only pay up to the current value of the vehicle, leaving you with a gap that you have to pay out of pocket.

Gap insurance covers this difference, ensuring that you are not left with a financial burden if your car is stolen or totaled. It is particularly important to have gap insurance if you made a small down payment on your vehicle, as you are more likely to owe more than the car's current value.

For example, let's say you purchase a new car with a sticker price of $28,000 and make a 10% down payment, bringing your loan cost to $25,200. With a five-year auto loan and a 0% interest rate, your monthly payment is $420. After 12 months, you've paid $5,040 and still owe $20,160.

Now, let's say your car is totaled in an accident. The insurance company calculates the current value of the vehicle, taking into account depreciation. If your car has depreciated by 20%, its current value is $22,400. Without gap insurance, you would receive a payout of $22,400 from your insurance company, leaving you with a gap of $5,040 that you would need to pay off your loan. With gap insurance, this gap would be covered, and you would not owe anything on your loan.

In addition to making a small down payment, there are other factors that may increase the likelihood of you owing more than your car's value, including:

• Financing your vehicle for 60 months or longer
• Leasing your vehicle
• Purchasing a vehicle that depreciates faster than average
• Rolling over negative equity from an old car loan into a new loan

If any of these factors apply to you, it is especially important to consider purchasing gap insurance to protect yourself from potential financial losses.

You can only buy gap insurance if you have an auto loan or lease and meet other lender requirements

Gap insurance is a type of financial protection that covers the difference between the amount owed on a vehicle loan and the vehicle's actual value in the event of theft or total loss. This type of insurance is particularly relevant for new vehicles, which can depreciate rapidly, leaving a "gap" between the loan amount and the vehicle's value.

In South Carolina, gap insurance is available from various insurance companies, car dealerships, and lenders/finance companies. However, there are specific requirements that must be met to purchase gap insurance. You can only buy gap insurance if you have an auto loan or lease and meet other lender requirements.

When purchasing a vehicle through a loan or lease, lenders may require you to obtain gap insurance. This is because gap insurance protects both you and the lender in the event of a total loss or theft of the vehicle. By having gap insurance, you can avoid making loan payments on a car you no longer possess.

To be eligible for gap insurance, you typically must be the original loan or leaseholder, and the vehicle should be new. Some providers may offer gap insurance for used vehicles, but they often have age restrictions, such as three years or less. Additionally, you will need to have comprehensive and collision coverage on your auto insurance policy to qualify for gap insurance.

It's important to note that gap insurance must be purchased at the same time as the vehicle, and it cannot be added later. This requirement ensures that the coverage is in place from the beginning of your ownership, as the vehicle's value starts to depreciate immediately.

When considering purchasing gap insurance, it's recommended to compare quotes from multiple providers, as rates can vary. You can explore options from insurance companies, dealerships, lenders, and specialized providers. Keep in mind that adding gap insurance to your existing auto insurance policy is usually the most cost-effective option.

Gap insurance is not the same as new car replacement insurance

While gap insurance and new car replacement insurance are similar, they are not the same thing. Gap insurance, or guaranteed asset protection, covers the difference between your car's actual cash value and the amount you owe on your loan. This type of insurance is designed to protect you if you owe more on your car loan than the car's depreciated value. It is typically offered for new vehicles but may also be available for certain used cars.

On the other hand, new car replacement insurance provides financial protection if your vehicle is stolen or totaled, and you have a comprehensive and collision coverage policy. This type of insurance will give you a payout to purchase a new car of the same make and model, regardless of the amount you owe on your loan. It is important to note that new car replacement insurance usually only applies to cars under a certain age or mileage limit.

The key difference between the two is that gap insurance covers the remaining loan balance, while new car replacement insurance provides the full cost of a new car. Additionally, gap insurance is often required when financing a car, while new car replacement insurance is not.

When deciding between gap insurance and new car replacement insurance, consider your financial situation, the likelihood of an accident, the cost and depreciated value of your car, and the type of car you drive. Both types of insurance can provide valuable protection, but it is important to understand their distinct features and choose the one that best suits your needs.

Frequently asked questions