You bet it is! A gap product can be a life saver! If your downpayment is less than 20% it was a great decision! I wish more customers realized the benefit of a gap product. If your daughter experiences a total loss- the insurance company is responsible to reimburse for the fair market value (the depreciated amount) not what you owe to the bank! The gap product generally picks up whatever the difference is from fair market value to what is owed to the bank. (make sure you read the fine print on your contract- up to $100,000.00 or $50,000.00 and not to exceed 150% of NADA retail.)
I hope your daughter enjoy's her new Mazda!
〉 Answered on Jun 1st, 2007 by Rebecca Chernek, President and Founder at Chernek Consulting Inc.
Gap insurance is a good buy if you have bought a car and put very little money down and financed a large portion of the car. Should the car be in an accident and it is totaled, the insurance will pay the difference between the amount owed and the value of the car. For example, if you owe $10,000 and the car is worth $7000, the gap insurance will cover the difference on the loan amount due. If you did not have gap insurance, you would have to pay the $3000. It is a good investment for someone who is just starting out. Congratulations on your new purchase and tell your daughter to take good care of her car so it lasts her a long time.
〉 Answered on Jun 1st, 2007 by Jenny Trostel, Partner at Anderson of Hunt Valley