Insurance agent just made my day!

[AR306]

Oh ok, and is that part of a loan figured in for ALL loans or is it a separate policy?

I had figured out I'd put between $5k and $10k cash down and then the payments on a $29k-$32k would be somewhere around $400/mo accounting for a 3% interest rate. Just curious if it would change my figures at all?

Thanks

-Emt1581

Gap Insurance is an add on.. you can get it through the dealer or you could ask your insurer.. some insurance companies offer gap coverage at a much lower rate. It's good to have if you put less than 20% down.

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[bscn8c]

GAP won't change your loan/interest at all. It should around $100 for a policy (if they are trying to charge you more than $200, they are ripping you off). I would always buy a GAP policy if I either finance the entire cost of my vehicle (no trade in) or have really high comp/collision deductibles (some GAP policies cover those as well, so be sure to ask).

 

[bmatt]

Yea GAP isn't required. The dealership will try to sell you a policy usually. I think I end up paying about $1/month for it. I'll probably drop it after a year or so, which would be about 12-20$ versus the $400 policy the dealer will sell you.


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[Emt1581]

Oh ok, so it's mainly to cover depreciation. I assumed the insurance was against the value of the loan or the value of the car...whichever was more. I'll have to talk to my insurance guy first and go from there.

Off topic, but in regard to the loan. Say I borrow $20k-$25k....is 3% realistic? And does that equate to paying $600-$750 on top of the sum I borrow or does ameritization play a role and it's actually a LOT more than that sub-$1000 amount?

I've just never had a loan before for anything other than my home, and I know I'm paying a hell of a lot more than I paid for the place.

Thanks

-Emt1581

 

[daltron]

3% is very realistic depending on credit. If credit isn't a problem, your everyday % not including promotions should easily be 2-3%. I don't know what you mean by "on top of the loan" though. For example, a 40K loan with low 2's% for 6 years is like $590-600 a month.

 

[ForTehNguyen]

gap is cheap buy it from your car insurance, never the dealer

 

[Khyber]

my gap came with my loan. gap is included when you finance a car with state farm...it was lowest rates at the time too... so lucked out there.

 

[Emt1581]

Now if I buy the car for say $32k and put $5k down and then 4 year from now I total it...do I get a check for $32k or significantly less?

Either way GAP sounds like something to have.

Thanks

-Emt1581

 

[Drugdealr]

my gap came with my loan. gap is included when you finance a car with state farm...it was lowest rates at the time too... so lucked out there.

I actually refinanced with State Farm they gave me gap and refunded me what I paid for my gap insurance. Also lowest rate.


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[AR306]

Now if I buy the car for say $32k and put $5k down and then 4 year from now I total it...do I get a check for $32k or significantly less?

Either way GAP sounds like something to have.

Thanks

-Emt1581

No no no.. Gap covers the difference on what you owe vs what the car is worth.

If the car cost 32k and you finance 27k, after a year the car could be worth 27k or less.. suppose after 1 year your car is worth 20k, if you still owe 27k and you total your car, you still have to pay 27k not 20k. That's where Gap comes in.. it covers the gap between 20k (worth of the vehicle) and 27k (what is owed on the loan).

 

[Emt1581]

I actually refinanced with State Farm they gave me gap and refunded me what I paid for my gap insurance. Also lowest rate.


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Refinanced...on a car?? So after you had it paid off you took a loan out against it again?

I just didn't know such a thing was possible. Again, I'm fairly new to loans...other than my home and my wife's ed. loans...we typically buy things outright, just when it comes to cars that means driving 10 year olds that are in good shape and then taking care of them. But for something this nice that will be this fun...breaking the rules a bit financially speaking.

-Emt1581

 

[AR306]

Refinanced...on a car?? So after you had it paid off you took a loan out against it again?

I just didn't know such a thing was possible. Again, I'm fairly new to loans...other than my home and my wife's ed. loans...we typically buy things outright, just when it comes to cars that means driving 10 year olds that are in good shape and then taking care of them. But for something this nice that will be this fun...breaking the rules a bit financially speaking.

-Emt1581

You can refinance a car loan to reduce the interest rate or extend the term in order to reduce the monthly payment.. I don't think you can borrow against a car unless it's some super fancy rare car that will definitely appreciate in value instead of depreciate which 99.9% of cars do.

 

[Emt1581]

No no no.. Gap covers the difference on what you owe vs what the car is worth.

If the car cost 32k and you finance 27k, after a year the car could be worth 27k or less.. suppose after 1 year your car is worth 20k, if you still owe 27k and you total your car, you still have to pay 27k not 20k. That's where Gap comes in.. it covers the gap between 20k (worth of the vehicle) and 27k (what is owed on the loan).

Gotcha, so there's no money left to pocket/buy another car. It just lets you walk away clean without screwing up your credit and/or leaving a big bill to pay for a totalled car.

See when I totalled my last car, my insurance cut me a check for it's value and I paid for my current car outright. But that car was paid off.

Gotta remind myself of these financial details when driving...and hope to hell no one hits me (but I guess if they're at fault the car would get replaced).

Thanks

-Emt1581

 

[Emt1581]

You can refinance a car loan to reduce the interest rate or extend the term in order to reduce the monthly payment.. I don't think you can borrow against a car unless it's some super fancy rare car that will definitely appreciate in value instead of depreciate which 99.9% of cars do.

Oh ok, so it's not like..."I want to put in a pool, loan me money against my car"....it's more about making things easier on the owner financially.

Thanks for the clarification.

-Emt1581

 

[AR306]

Gotcha, so there's no money left to pocket/buy another car. It just lets you walk away clean without screwing up your credit and/or leaving a big bill to pay for a totalled car.

See when I totalled my last car, my insurance cut me a check for it's value and I paid for my current car outright. But that car was paid off.

Gotta remind myself of these financial details when driving...and hope to hell no one hits me (but I guess if they're at fault the car would get replaced).

Thanks

-Emt1581

Well yeah, if you owe zero on an older car and it's worth $5,000 you'll get a check for $5,000.

New cars however depreciate like crazy.. so don't be shocked to see a drop in value of 10-15% in the first year. This is why gap insurance is necessary for most people.

Prior to getting this stang, I too bought used outright.. this is my first new car loan and unless you have some assets like a house (if you still owe, hopefully you have equity in it) they may ask for 20% down to cover depreciation on the vehicle.

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