Dear Terry, Is there anything to beware of when it comes to gap insurance coverage? -- StevenDear Steven, Gap insurance usually comes into play on a leased vehicle. It's supplemental insurance to cover the difference between what a vehicle is worth and what is owed in the event the leased vehicle is totaled in a crash or is stolen and not recovered. The cost is usually a part of the lease. On conventional loans, some insurance companies offer a form of gap insurance that will do the same thing as lease gap insurance, but usually it comes with an increased premium.Check into whether there is any deductible involved and whether you would be entitled to recover your down payment. Otherwise, since most cars these days are carrying negative equity for three or more years, gap insurance can be a prudent addition.Here are this week's reader questions:•Hang on to SUV if you're 'upside down'•Is gap insurance worthwhile?•What are my odds of a refinance?•How can I bring my car note current?If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter. advertisementRelated Links:7 best off-to-college carsNational auto loan averagesWhat changes auto loan rates?Related Articles:All new cars for 20105 steps to 'clunker' dealTake the 'cash back?'
Dear Terry, Is there anything to beware of when it comes to gap insurance coverage? -- Steven
Dear Steven, Gap insurance usually comes into play on a leased vehicle. It's supplemental insurance to cover the difference between what a vehicle is worth and what is owed in the event the leased vehicle is totaled in a crash or is stolen and not recovered. The cost is usually a part of the lease.
On conventional loans, some insurance companies offer a form of gap insurance that will do the same thing as lease gap insurance, but usually it comes with an increased premium.
Check into whether there is any deductible involved and whether you would be entitled to recover your down payment. Otherwise, since most cars these days are carrying negative equity for three or more years, gap insurance can be a prudent addition.
If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter.