Hello,
I’m working on an auto loan application to buyout my leased VW. Lease contract is up in early 2024. It is a 2021 VW Jetta with 18661 miles. The loan is $14300 for 3 years. My car insurance doesn’t have gap insurance, they have loan payoff that covers 25%. My lender is offering GAP insurance for $545. I am not quite sure if it’s worth buying if the current car value is around $20000. Any feedback is greatly appreciated.
Seems like a waste if the loan is that far under market value
Wait until the end of the lease, not going to save much by doing it sooner. If you have an accident between now and then, VW takes the hit on resale or getting totalled etc. and you walk away. I guess if it gets totalled you might come out ahead on purchasing it now.
There’s literally no gap for you to insure.
I paid off the remaining lease payments left in the contract before the loan processing began. I’ve decided to buy the gap insurance…just in case used car market cools off :0
How much is it going to have to cool off for you to be underwater?
Please cancel.
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Yikes. Doesn’t sound like you did the math on this one.
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So,you are paying probably $500 a month for the next 3 years to drive a 3 year old Jetta. Why not lease a new one for $400 a month and pocket most of the $6K you think you have in equity. In 3 years you will have more cash in the bank that the Jetta will be worth.
It’s going to be a strange edge case for any 2-3 year old used car bought at or below market value with a 36-mo loan to be worth less than payoff.
If the loan amount is $14,300 and you’re paying down roughly $350-400/mo in principle per month, the cars value would have to crash pretty hard if it’s worth more than $14,300 now, which it sounds like it most definitely is. Like crash unprecedentedly hard. Also if you’re underwater by $545, you’d still be ahead vs getting gap.
Hi there. So you’re saying it is less likely for the VW Jetta to cool/crash substantially in next 3 years? I know VW is no Toyota that can hold great value. Not quite sure how much VW would depreciate. Btw I am not saying you’re wrong. Your feedback is greatly appreciated and I’m still thinking about getting gap (haven’t purchased it yet).
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I’d be paying under $500 a month for next 3 years for the loan. I don’t want to lease a new one as I have been leasing VW in the last 5 years (2018-2021 and now my current 2021 VW). My current lease was $270/month with $0 down with 12K miles a year. The $400/month with maybe no $0 with the same miles don’t sound very attractive 
It would basically have to lose half its current value in one year for gap to break even, much less save you anything.
Gap in this situation is a waste of money.
Gotcha. After reading the feedback, I’ll definitely reconsider not buying gap insurance.
You understand that as the car depreciates, the loan balance also goes down right?
Why don’t you put up the amortization table of the loan you’re getting and point to which point of time you’d be massively underwater?