| skv |
Have you guys bought GAP insurance with your MDX purchase. How much did you have to pay for it.
GAP insurance covers the difference (a.k.a GAP between the equity of the car and the loan amount on the car if the car is lost or totalled) |
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| G. COLTON |
How would the need for this type of insurance ever arise? Most people would never buy a vehicle that was going to depreciate so much that they owed more on it than it was worth. Buy a vehicle that you can afford and pay down a reasonable dollar amount and save the insurance expense.
This is the automotive industries equivalent of the Adjustable Rate Mortgage scam.
G |
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| hammermdx |
| Yes, but only when leasing, some leasing companies include it....I know BMW does. |
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| skv |
GAP insures you to your loan amount which is car price + state taxes. Also it covers your deductible.
example
price of car: 25000
taxes: 1500
loan amount: 26500
if your car is lost or totalled, your insurance company may pay you 24500 (25000 - your deductible)
you owe the 26500 and have to eat the 2000 loss. I think this is where GAP helps. Not sure why you think it's a scam.... |
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| BillHeart |
Gap covers the difference between what you owe the lienholder or leasing company and what your insurance company gives you for the vehicle less your deductible.
Example, you have, say, a 2005 MDX Navi with, say, 50K miles. Say your current lease payoff to Honda Financial is $27,100 and it gets totalled.
Say your insurance company values it at $25,800.
GAP Picks up the $1,300 difference.
Be aware that (At least here in NY) American Honda Finance includes GAP Coverage on lease and loan contracts at no charge, so if you're buying from an Acura dealer and you are buying a CPO MDX (In which case youre doing the 3.9) you're covered regardless.
You still, however, will owe your deductible.
It's nice to have, especially if we have a customer trading out of equity, meaning that they are burying negative equity in the new car (Which happens a lot)... just had a customer walk out of here owing almost $53,000 on a brand new MDX Tech, they traded out of a car that they owed over $10,000 more than it was worth.
In their case, GAP is a godsend, should they total their new MDX and not have GAP the bank still will want the payoff amount and their insurance company MIGHT give them MSRP for it if it's almost new. |
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| skv |
| I did not know the acura special 3.9 covered GAP insurance. I did not lease the car, I bought it and got the 3.9. Do you think the 3.9 covers GAP in this case. thanks |
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| BillHeart |
quote:
Originally posted by skv
I did not know the acura special 3.9 covered GAP insurance. I did not lease the car, I bought it and got the 3.9. Do you think the 3.9 covers GAP in this case. thanks
Check your contract as it may differ from state to state, but if you financed through American Honda Finance Corp then your contract should include GAP.
Our contracts here in New York all include it. I suggest calling AHFC to confirm. |
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| JeffK |
Dear BillHeart:
Nice to have another versed in leasing and financing on the Board!
With regard to leasing, Bill is 100% correct: By law in New York all leases must contain GAP insurance.
Just think of it this way: MSRP is $40,000, negotiated price is $37,000, monthly lease payment is $650.
The day you walk out the door, the car is used and is worth 20% less than MSRP, or $32,000. But you have paid only $650.
Even if all of the $650 was applied to depreciation, that means you paid down to $36,350 ($37,000 less $650). Assume that the car is then totaled or stolen. The insurance company will pay the fair market value - $32,000.
Without GAP insurance you will be liable for the difference between $36,500 and $32,000, $4,500.
Of course only a portion of the $650 went to depreciation and like a mortgage, most of the $650 went to interest. So for all intensive purposes, little to none of the $650 went to depreciation, leaving your balance at close to $37,000 and a "gap" of close to $5,000.
I have never bought a car on time, but the same principal will apply. So I would only finance with GAP insurance.
JeffK |
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| 619m5 |
| $199 from my credit union :D |
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