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Originally Posted by roughyear
WOW... Lesson learned.
I know what you mean by the "gap" between the current auto loan amount and the actual value of the car, should an accident total the car. I guess I should have said "make sure you get gap insurance if you put no money down". Luckily, my auto insurance comes with FREE gap insurance (well, nothing is free, but they're not showing a line item cost for it).
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Very true, I've financed with free gap insurance as well; its a nice security blanket. Your insurance company can offer it with your policy or if you finance with them. However insurance companies usually don't have the lowest interest rates, so you could be paying more to finance the amount. You're paying for gap insurance one way or the other even if its "free"; it can be baked into your insurance premium or by the aforementioned higher interest rates. If not free, you can pay for it monthly or for a one time fee that covers the life of the loan. Worst of all you're paying for it on the finance end, paying interest in all that financed amount over the life of the loan. Of course the lower the interest rate, the less those cost are. Gap insurance is offered because its a money winner, more people pay for it than actually need to use it so they keep pushing it as an option, plus they win on the finance end with you financing more. If they lost money they wouldn't offer it or they would raise the cost of it.