Let me clarify because I can see how what I said is confusing. Assuming insurance does not cover the balance of the loan, then GAP kicks in. This is how it was explained to me by an insurance agent that was in-house at an old dealer I worked at. GAP will not cover a limitless amount, there is a cap. So if you owe $50,000 and the car is worth $25,000, depending on the details of the plan, GAP will pay out 10%-50% of the $25000. If it is a brand new car, some might cover the taxes/fees on a replacement car while others will not. I donât work with the F&I office on GAP that frequently, but as I am writing this and remembering the details it is usually 150% most dealers offer and 125% from most insurance companies. But donât get bogged down in that example, just know the details of each plan. Not every plan covers the same percentage and other might have a dollar cap on a claim.
Depends on the situation and car. 10% down on a 36mo loan is good, but is not on an 84 month loan.
I can definitely see how GAP makes more sense with longer terms and smaller down payments (or no down payments + rolling in negative equity, up to the max LTV on the original loan).
With that said, the wisdom of doing the deal in the first place also diminishes as you go up that continuum, so at some point you have a ridiculous loan on a car you canât afford with coverage you shouldnât need â and youâre paying an unreasonable cost in multiple ways for all of those decisions.
Somewhere in the middle are probably some worthy use cases.
It would be interesting to see the average dollar amount of GAP claims that were actually paid, and what percentage of policies ever see a claim and pay out a single nickel.
Depends on the vehicle/dealer/timing honestly. Iâve gotten three <$10k used vehicles from high volume dealers for far cheaper than I could have gotten them private party because they were due to be kicked to auction soon.
I second that. Buying from private party is cumbersome. At a dealership, itâs just numbers. Do they need to move metal? Is it going to auction? Is it an aged unit?
Private party is fraught with emotions from the seller (But I paid 50k for it 2 years ago! It drives like a dream! I put in 20k in after-market upgrades))
In my experience used car asking prices for 2-3 yr old Toyota, Honda etc are excessive. Especially when you consider that the warranty is fully or almost expired. Much better off looking for leftover brand new of the prior model year. Makes even more difference if youâre financing because new APR < used APR 99% of the time.
Luxury brands are the complete opposite (except for the APR part)
One minor thing to look out for on a new car is the mileage. If itâs in the couple hundred range, it probably was test driven a few times, which means it has slightly more wear and tear than one fresh off the boat.
Review the buyers order before going in and know that certain things may change.
1a) Know your upper limit on the change. 0.0001% I doubt is big, 10% lol
At the F&I box, make sure you get the details on products you are absolutely interested in buying before making it clear on products you are not interested in. Once you say no, F&I just wants to move on regardless of your intent to purchase.
