- by C.C.
If you’ve borrowed for your vehicle, there’s a good chance your car’s market value could be less than the total outstanding balance on your car loan.
If that’s the case, the theft of your car or a collision that leaves your vehicle a total loss could lead to financial disaster. You could find yourself in a situation where your insurance doesn’t pay enough to pay off the loan and you end up paying your lender for a car you no longer have.
Gap insurance ensures that doesn’t happen by paying the difference between your vehicle’s value and the remaining loan balance. Most lenders require you to buy this coverage, but consider purchasing it even if yours doesn’t so you won’t be left with months or years of payments on a destroyed vehicle.