If you're planning on financing a vehicle at Fox Subaru, it's worth learning about gap insurance to see if it makes sense for your situation. Here's a closer look at what gap insurance is and when you might need it from our Auburn car dealership.
What is gap insurance?
When you finance a Subaru Forester, an Impreza, or any other model at Fox Subaru, you might reach a point when you owe more on the car than it's worth. Gap insurance is designed to make up the difference between how much you owe on your vehicle and how much it's actually worth.
Here's an example of how gap insurance works. You purchase a new Subaru Outback that costs $30,000 and finance the entire amount. However, initial depreciation reduces your Outback's value to $27,000. A few months after your purchase, your vehicle is totaled in a collision. Your auto insurance police covers the vehicle's $27,000 value, but you still owe nearly $30,000 on the loan.
If you have gap insurance, you won't be responsible for paying back that nearly $3,000 difference. You'll have coverage for an emergency, plus peace of mind each time you get behind the wheel.
When is gap insurance right for you?
If the amount you owe on your vehicle is equal to or less than its value, gap insurance probably won't be necessary. But there are certain situations where it can be a worthwhile investment.
If you take out a loan with a longer term that will take longer to pay off, or if your down payment is small, you're more likely to be "underwater" on your loan for a while. Gap insurance can protect you financially until those amounts even out again.
Gap insurance is especially handy if you're buying an expensive sports car or luxury vehicle that depreciates quickly. Depending on the model and manufacturer, you may also need to carry gap insurance if you lease a vehicle.
Have questions about gap insurance on your Subaru or any other aspect of vehicle financing? Get in touch with our team at Fox Subaru in Auburn, New York; we're always happy to help!
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