How do I cancel my gap car insurance?
There are a number of factors that go into purchasing a new vehicle. The first and most important aspect of new vehicle purchases is price; drivers need to know that the vehicle they want to purchase fits into their budget. Some buyers choose to pay cash for their vehicles, meaning that they need to find a vehicle that fits into their cash budget.
Others finance some of their vehicle; this means that they give money down on a new car and finance the remainder of the vehicle. Others, still, decide to finance the entire purchase of their car by not putting anything down. This means buyers need to find a car that fits into their budget based on the monthly payments of the vehicle. Another factor that should be considered is the price of car insurance for the car model you are looking for.
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Purchasing a New Vehicle
Buyers who choose to finance all or some of their vehicles are often more concerned with the monthly payments of the vehicle loan than of the price of the vehicle itself. Many buyers want vehicles they cannot afford, which means they are willing to do whatever it takes to lower the monthly payment, including stretching out the payments on a loan with a longer term.
While this may be wallet friendly to most buyers, it can be detrimental to buyers who are upside down on their car and get into an accident that totals the vehicle.
Being upside down in a vehicle means that the total value of the vehicle is less than the amount of money that the owner owes on the vehicle loan. This has a lot to do with depreciation; when a driver takes a car off the lot, it automatically loses value. Some cars lose as much as 30 percent of its value the moment it is driven off of a dealer’s lot. There are some steps that you can take to get out of that upside down car loan.
Buyers who take long term loans, put nothing down and drive off the lot are more than likely going to be upside down several thousand dollars, instantly. While this does not concern some buyers, it is a problem that all vehicle owners must be made aware of.
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Value of the Car
If a vehicle is in an accident and determined a total loss, it cannot be fixed. This means that the insurance company will pay off the value of the car, but that will do nothing for those who owe more on their vehicle than it is worth. A vehicle that depreciated off the lot may be worth $25,000 now, but the amount of money the owner still owes may be well over $30,000. This means that the owner of this vehicle now owes an additional $5,000 on a car that they will never again drive.
The Benefits of GAP Insurance
Vehicle owners who are worried about being upside down on their vehicle can purchase something called GAP insurance (Guaranteed Asset Protection). GAP is great to have. If a person’s car is totaled in an accident, stolen and not recovered and/or damaged beyond repair the GAP insurance will cover the difference between what the vehicle is worth and what the vehicle owner owes on the vehicle. You also should consider gap insurance for a leased car.
The GAP insurance plan must be purchased separately from the vehicle and it must be purchased from the same lender who financed the vehicle. Depending on the company that holds the loan for the car and the GAP insurance, there may be other benefits as well.
GAP Cancellation Policy
GAP insurance plans can be cancelled. Many people choose to cancel their GAP coverage for the following reasons:
- Vehicle is sold
- Vehicle is paid off
- Vehicle is traded in
In this case, the amount of money that the person paid for the GAP plan is returned to them as a refund. Many companies allow GAP cancellation refunds only before 90 days have passed; others prorate the amount of the GAP insurance based on the length of the contract and provide a refund of that amount.
Canceling GAP Insurance
To cancel a GAP insurance policy, the owner of a vehicle must contact the financial institution that holds the loan on the vehicle. The owner must then request their GAP insurance is cancelled. They will receive a form in the mail that they must fill out, sign and date, and return to the lender for a refund and to finalize the cancellation process. For further information, vehicle owners can contact the loan holder of their vehicle to inquire about their specific GAP cancellation policies.
It is important that drivers not cancel their GAP insurance if they cannot afford to pay the excess amount of money owed on the car in the instance something happens to it. Before applying for a vehicle loan, buyers should compare the GAP policies of their favored lenders to see which one will make the most financial sense.
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