rugmankc

Got a new 2016 RX350. Lender is offering me Gap Insurance for 399.00 added to loan. Which will cost 455.00 over the loan length.

Never bought Gap Insurance before, with 50 years on the road.

I believe by year 4 I would not need it. As, loan balance would be less than replacement value.

I think it is hard to find 3rd Party/Reliable Gap Insurance. And insurance companies like my State Farm want the car financed with them.

Is there an amount like 399.00 that would be considered a good buy.


Thanks for any comments,

Ken

dknyov

Yes I bought GAP for 500$ when I finance the car, I turn down all other add up from Finance manager, but GAP just 500$ so I decide bought it.

ericsan13

I added "new car pledge" to my insurance policy for $18.70/6 months. Covers first 24k miles or first two model years.

asheville

There is a formula for this. Obviously, if you can't afford to self insure, then throw out the formula and buy it.

Take the cost of insurance and divide it by how much you are covering. So for $10,000 it would be 4%. (I am thinking the car would at least appraise for 10k below what I paid for it). If you have a greater than 4% chance of totaling the car and it being a total loss, then the insurance is a good deal. I have yet in my lifetime to total a car and it was my fault, so way way way lower than 4%. This is how insurance makes money.

Personally, I self insure. I'll keep the $400 and take my chances.

rugmankc

Thanks

I never had an accident. But many more distracted drivers out there lately. Some may not be insured.

399.00 just seemed reasonable. Peace of mind, I guess.

However, am leaning toward not getting it.

FLYCT

We think alike. I only insure that which I cannot afford to lose.

Another factor to consider in calculations is IRS rules that allows you to write off Casualty Loss with a $100/event deductible.

chiefguy

Gap insurance covers other losses like theft and flood. Very worth the expense

rugmankc

Thanks, re-read that in paperwork they sent me. Need to read "fine print". The chart with the offer shows me about even in year 3.

Oldfart

Great tax advise on car forum, just do not forget to subtract 10% of your adjusted gross income from that total to calculate your allowable casualty losses. In layman terms, if your AGI is $100K first 10K of casualty losses are not deductible.

FLYCT

Thanks. I wasn't that aware of the AGI limitation. I've never had a gap loss with any of the 52 cars I've owned in over 50 years, . Only once was a car that I owned totaled. The other driver was at fault and his insurance company (Allstate) paid very fairly for that car.