What is GAP Insurance?
When we buy or lease a new Toyota, we don’t like to imagine the worst possible scenarios. But unfortunately, accidents happen. That’s why there’s GAP (Guaranteed Asset Protection) insurance - so that you’re covered when the unexpected occurs.
How it Works
When you drive your new Toyota out of the dealership, it starts depreciating in value immediately. This can result in a “gap” between what you owe on the loan or lease and the depreciated value of the vehicle. For example, you buy a car and take out a loan for $25,000. Since its value depreciates immediately, the insurance company would calculate its worth to be only $20,000. So, there’s a $5,000 gap in what you owe and the actual value of the vehicle.
If you get into a wreck and it’s declared totaled, the insurance company will only pay the $20,000 that your vehicle is worth, which means you will be responsible for the $5,000 gap left on your loan or lease - unless you have GAP insurance. GAP insurance will cover the “gap” left from what the insurance company pays and the amount left that you owe on your car loan or lease.
Who Needs GAP Insurance?
Not everyone needs GAP insurance, but you should probably consider getting it if you:
- Purchased a quickly depreciating vehicle
- Are leasing your Toyota
- Made less than a 20% on the down payment
- Have an auto loan that is 60 months or longer
If you would like to learn more about GAP insurance or have any questions, contact our financing experts at Fiore Toyota. Our Toyota dealership is located in Hollidaysburg, PA near Altoona, State College, and Johnstown.
