There are many variables that go into financing an automobile. The buyer and the lender are taking large risks by entering into a financial contract for payment of vehicle. Situations such as accidents, natural disasters and theft can put both parties in tough situations. Gap insurance exist to cover the balance between what a car buyer owes and what the lender expects to be paid.

For example, if a car is rendered unusable before the financial contract is over, the buyer is still responsible for paying the rest of the loan even though they do not have the services of the vehicle. An insurance settlement will give them the value of the car based on Blue Book information. However, this will normally not equal to the amount of the loan. Gap insurance comes into play and relieves the car buyer from the burden of paying money on a car that they cannot use.

Here at Jim Peach Motors, we can give specific information when you're financing a new automobile and want to know more about Gap insurance.

Categories: Finance