In our previous article on Car Financing & Insurance (The F&I Department) of your local car dealers, we talked about how the F&I person is there to try to sell you additional products that will help the dealer maximize the overall profit on the deal.
We talked about the car financing piece and some tips to consider on extended vehicle warranties.
Let’s discuss the insurance part of the F&I department at the car dealer.
Finance managers at car dealers will also push for you to buy insurance policies such as gap insurance.
Gap insurance pays you if your car is stolen or totaled and you owe more than the car is worth.
Let’s say for instance that the difference between what you owe on your car is $5,000 more than what your insurance is will to pay for the market value of the car. This isn’t an uncommon situation for anyone these days to be in with all the creative financing available to dealers. This coupled with the depreciation rate on cars and unless you put a good bit of money down on your car you are probably at this type of risk. If you are, then Gap insurance would cover the cost of your difference.
In some instances Gap insurance could be quite appropriate for you. However, check exactly what your insurance coverage offers you. You may already be covered or be able to add this insurance to your current policy.
