Did you know that your BMW depreciates by about 11% immediately it leaves the dealership lot? Within one year, the car will have lost nearly 20% of its initial value. That is where GAP insurance comes in as it is designed covers this wide gap that exists when the BMW starts to lose value.
What is GAP insurance?
GAP stands for Guaranteed Asset Protection, and it is a form of insurance that is designed to cover the difference between the amount of your loan and the worth of your car after depreciation. Purchasing a good GAP coverage is the best way of ensuring that you are completely covered in case your BMW gets totalled, and you have not finished paying the loan. This way you can have the serenity that you will not need to pay a lot of money out of your own pocket in case of any emergency.
What are the benefits of a GAP cover for your BMW?
It covers an extensive financial gap – Many GAP policies are able to protect new cars like a BMW against losses of more than $50,000 and sizeable insurance deductibles. If you are in any one of the following scenarios, consider getting optional insurance coverage:
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- If you have a made a down payment of less than 20%.
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- If you are financing a car loan for more than 60 months.
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- When you are a rolling a previous vehicle loan into a new loan
- If you purchase a car that depreciates very quickly
Having Guaranteed Asset Protection is similar to when acrobats walking on a tightrope are usually given a net below. Even the best acrobats can slip and tumble, hence the need for the net. Likewise, even if you are a highly cautious driver and plan to treat your new BMW very carefully, you may, unfortunately, get an accident that results in financial hardship.
You can pay for GAP cover in various ways – Another benefit of getting GAP insurance is that you can either get this coverage at the car dealership or at a car insurance company. Once you buy a BMW, GAP cover payments can be integrated into your standard car loan, which gives you the convenient option of paying for the cover every month instead of a onetime lump sum payment.
Possibility to receive a refund – A GAP cover is only limited to the period of your car loan. After you have paid off the loan, there is no longer any need for this optional insurance coverage. However, if you refinance the BMW or sell it before your loan term expires, you should get a refund. This is also applying to those who paid their GAP premiums upfront. Thus, if you are refinancing your car, ensure you purchase another GAP cover for the new policy.
In conclusion, people usually owe a lot more money compared to what their new car is worth, which can result in very expensive repercussions if an auto wreck occurs. Getting Guaranteed Asset Protection may be the best solution to prevent such a financial disaster.
