CAR DEALERSHIP GAP INSURANCE. DO NOT BUY it from Dealers (Cars, Trucks, SUV's)) Auto Expert 2022

CAR DEALER GAP INSURANCE. WHY WOULD YOU BUY IT FROM THE DEALER WHO IS CREATING THE PROBLEM IN THE FIRST PLACE?
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[hyyue]

Man, thanks for your video. I will cancel the GAP insurance tomorrow.

[KevinHunter]

It's always nice to see one of the car dealers (or dealer employees) show up and click dislike on our informational videos. It always lets me know that we've hit the nail on the head. I'm sure you're going to love the next video coming out on extended warranties. Make sure you watch for it!

[KevinHunter]

Why You Should Never Buy Gap Insurance From A Car Dealer

Another great article by: SteveLehto (Steve Lehto has been practicing law for 23 years, almost exclusively in consumer protection and Michigan lemon law. He wrote The Lemon Law Bible and Chrysler’s Turbine Car: The Rise and Fall of Detroit’s Coolest Creation.)

Here is his take on Dealer GAP Insurance:
In my practice, I review automobile purchase documents all day long. And I cringe every time I see someone who has purchased the overpriced gap insurance from the dealer. They’ve been ripped off to the tune of several hundred dollars and probably had no idea.

For those who don’t know, a brand new car loses a big chunk of its value the moment you buy it. With the purchase, your vehicle went from being “New” to being “Used” with the stroke of a pen. One more drawback to this is that if your car were to get totaled – say, as you drove it off the lot – your collision coverage will most likely not pay enough on the claim to pay off the underlying loan.


This discrepancy is why one insurance company runs ads about how they are different because they sell policies (to dimwits who name their cars “Brad”) which will actually pay replacement value for totaled vehicles. Of course, they are different because most insurance policies promise no such coverage.

As for the typical insurance policy? Go ahead and read yours: It likely says that the company will pay you what it costs to replace your vehicle if your vehicle is totaled. It has nothing to do with what you owe on your car.

And I get that phone call all the time. “I owe $30, 000 on my car and the insurance company is saying they will only pay me $22, 000!” Yes, apples to oranges. If $22, 0000 will buy you a car just like the one you totaled, then you have been made whole under the policy when they pay you that amount.

So, to prevent this scenario from happening, the salesperson at the dealer will tell you how you can buy this great product called gap insurance and all you have to do is pay one lump premium... which they will kindly roll into your loan. Should you ever find yourself in this situation, you will be covered. The gap policy will pay out whatever the difference is between what you owe on the vehicle and what the insurance company is going to pay. (Gap insurance is also sometimes rendered as GAP – with the explanation that it stands for Guaranteed Asset Protection but it is just as likely that it describes the gap between what is owed on the loan and what is paid by the original insurance policy.)

The problem is this: Car dealers sell gap coverage at ridiculously inflated prices. Figures are hard to nail down but dealers routinely charge quadruple what a regular insurance company will charge for the insurance. They then pocket up to one-half of what you pay them for the policy. That’s a hefty commission, my friend. Removing that middleman will save you a chunk of money.

Gap coverage, if you want it, is substantially less expensive when you buy it from your regular insurance company. And yes, they probably offer it. In fact, all the insurance company folk who claim I have bashed them in my pieces should send me gift baskets for this one. Call your agent and ask how much the gap coverage will be on your new car. Then ask the salesperson at the dealer for a quote on the dealer’s offering. You want to see apples to oranges? Don’t be surprised when your agent says he/she can get you the same coverage through your regular insurer for one-third or one-quarter what the dealership offered. And the dealer’s coverage will probably not be with an insurer you have dealt with before. Bob’s Insurance Shack? Sure - sign me up!

Is gap insurance a good deal? Depends on your aversion to risk and what kind of price you are willing to pay. But that price will almost certainly be lower from your insurance agent than it will be from the auto dealer. Just make the phone call and save your money, if you are inclined to buy it.

Follow me on Twitter: @stevelehto

Hear my podcast on iTunes: Lehto’s Law

[dustinbrown]

From recent experience I purchased GAP insurance through Honda that was 500 bucks. Total losses my motorcycle and still owed 600 bucks. They kicked the claim due to to small of a balance. I kid you not when I was told this I surely thought it was a joke. But GAP insurance use every resource possible not to pay the claim.

[nv]

All of your videos are spot on.
To me this whole dealer sales scheme is an outdated model that should be put out of its misery. It does nothing for the consumer and it's a ridiculous way to make a large purchase.

[Godschosenchild]

Thanks Kevin because I'm actually purchasing my Toyota this week & will be declining everything they try to sell me!!!

[neldacollins]

Thanks for the information. I got taken big time by the car dealership and have gap. Had 6 months to pay off the car and totaled it. The insurance and dealer took my car and paid themselves and left me without a vehicle to drive to work and no way to replace it. GM finance refused to use GAP to pay it off and are charging me over $300.00 out of my pocket to pay what they say I owe them for the car they now own. My insurance paid them over $4500.00. I am furious but can't replace the loss. Never plan to buy a new car again. This is very cruel when I work pay check to pay check and use automatic debit to pay so I haven't missed payments.

[masonstansberry]

I got Gap through progressive, and my car got totalled with hail. Turns out they only cover 25% of the remainder. The insurance company said the only way to get actual gap insurance is through the lien holder at the time of purchase. Not sure if that's true, but buyer beware.

[mdrealtorchic]

Thank you! I so needed this, so glad I walked out of the dealers office today.

[peterbankov]

Never buy GAP, that's waste of money. Always pay my car with cash or take no more than 36 months loans and try to pay for 12-16 months. Even something happen and be negative on loan have saved much more money of not taking GAP on all my previous cars.

[TheWheezychannel]

Hello... I have a question
i just walk out from a dealership dealership because they try to forece gap and what they told me was that the finance requires it is true car cost is 13, 000

[KevinHunter]

Car dealers have pushed GAP insurance on car buyers for many years. What some of them will say is that their GAP "is the best, " as if a car dealership is the only entity to distribute quality products. With consideration of the many scams, lies, and outright deceit that happens at far too many car dealers, these kinds of statements are quite laughable. There is a difference between some dealer GAP policies, and a GAP policy that you can buy from a typical insurance agent. "Normal" GAP is designed to cover excess loan balances created by high interest, longer term loans, higher miles driven in a year, etc. Dealer GAP is designed to cover every rotten piece of advice they give you in a car deal... like "Yes, you can roll that $5, 000 negative equity right into this deal. No problem"... or "Here's our menu of BEST SECURED options you'll need to protect your investment." As if buying a vehicle that rapidly depreciates and is loaded with tons of worthless fluff would be considered an 'investment' by anyone with an intelligent mind. Since dealer set their customers up with financial ruin, they offer a product to prevent the unthinkable: A customer getting stuck with a totalled car, and the thousands of dollars of worthless "product" they packed into their car deal. So, when a dealer says their GAP is different, believe me when I say that the only way you need CAR DEALER GAP is if you were stupid enough to accept all of their advice and suggestions during your car deal, and in your previous car deal. If you aren't that stupid, then just buy GAP at your local insurance company (if you even need it).

[scottie]

Kevin. Video started off good with good info for the customer. You know like I know that everyone doesn't have 20% down to put on a car and that everyone doesn't have great credit. Thought you advice is great about how to go about about buying the car I think the issues is more the way we are groomed as a society. Customer should buy that Corolla for 48 months but they only want the Avalon for 84. Still keep posting. Good info.

[Kanti]

My sister was buying her first car and the car dealer ship wasn’t selling the car that she want to her because of she has no credit. Then we start doing the co-signing paperwork and they realized that her APR would be low because of my credit score. Then magically they decided to have her buy the car in her own name with a bit of down payment.

[davidjohnson]

Another excellent video Kevin. I'm still working on getting the contract changed to help protect the consumer from this type of scam. Keep up the good work.

[edwilko]

No its not my cousin, neighbour and a guy at work have all had to claim on theirs after un-insured drivers hit them and their insurance wouldnt payout to cover the pcp loan value left on their writen off cars.

[sophialove]

I hate the games and deceptiveness involved in buying a car!! You gotta be on the top of your game to out smart a car dealer/salesman!!

[robertlouie]

I bought gap insurance. Is there any way to get out of it after signing for the car loan?

[seannyg]

I have gap insurance I got it from the dealership I want certain options the sales guy had to go to another dealership to get but I drather have it just invaded something does happen

[theresatripett]

Hi
I Refinanced my 2016 Nissan Rogue on 06/01 2019 from a Lease.
The Dealership added Gap Insurance. I have full coverage with my primary Insurance company
They, the Dealership sent me a cancellation notice to see if I want to cancel. The Gap Insurance
I have until June 30 th to respond..
If I cancel the Gap Insur. Will my monthly truck payments be lower.
Or will my monthly payments go up since I didn't put money down when I Refinanced the Rogue from A Lease to Buy.