When you are financing your car with bad credit loan, the best way to waste your money might be investing in gap insurance. When your car is being financed with bad credit car loan, it means that your car primarily belongs to the loan company or your bank until the last payment.
In case, you get into an accident much before you make full payment for your vehicle, your car insurance coverage will take care of the damage lessening your deductible. But in case, the accident is so severe that the car is a total wreck then your auto insurance company will provide you with the retail value of the car before accident or the retail value after lessening your deductible.
Your car starts to lose its value as soon as it gets on the roads. Suppose, you buy a car on loan and paying of the loan every month but you get into a severe accident and your vehicle is a complete loss. Your car insurance company pays the retail value after some calculations and after deducting your deductible. Nevertheless, as almost every car depreciates about 30 per cent in the first year itself, the retail amount paid by the car insurance company is not enough to pay off your loan. This is where the car owners feel ‘upside down’ for getting a car loan for buying a car.
Checking out some of the car insurance comparison sites would help you understand how gap insurance plays a role of the last resort in such situations. Your gap insurance will guarantee to pay for the difference between the balance on your bank loan and the retail amount settled by your car insurance company after cutting out the deductible. Some insurance companies forgo the deductible if the accident was not your fault.
Some people believe that gap insurance coverage is just a waste of money. At times, this belief is true in cases, where the loan is of short term or the down payment is heavy making the instalment months few. However, in some situations, gap insurance makes sense.
Get low cost insurance when you use car insurance comparison sites online to compare insurance quotes.