Whether you’re looking for a pre-owned BMW vehicle for sale or you want to buy or lease a new BMW car, you may want to get gap insurance. Gap insurance is a type of auto coverage that will pay the difference between what you owe your lender and what your standard policy pays you if your automobile is totaled or stolen and missing.
Your standard auto insurance will only compensate you up to the fair market value of your automobile if your car is destroyed or stolen, which may be less than the balance on your car loan. If you have gap insurance, you won’t have to worry about tapping your savings to pay that difference.
Clearly, gap insurance is often a wise investment but it’s usually not a requirement. That is, it’s normally not required if you buy a vehicle. If you lease an automobile instead, you may have to purchase gap insurance to fulfill your contract.
Having been a BMW dealer in MA for years, we can tell you that even drivers who purchase a BMW car may want to buy gap insurance. Here are some of the scenarios in which it often makes sense to purchase gap insurance:
- You put 20 percent or less down when you bought your vehicle
- Your auto loan is 60 months or more
- The car you purchased will depreciate faster than average
- Your current auto loan includes negative equity from a prior loan
While it makes sense to buy a moderately priced gap insurance policy in some cases, it doesn’t in others. When you visit our Peabody, MA BMW dealership, we’ll tell you that you don’t need this type of coverage if you don’t owe anything on your vehicle or you can pay off your loan balance easily if you have to.
To learn more about gap insurance, contact BMW of Peabody today.