The reality is that few people put down more than 5%-10% when buying a new vehicle. 20% depreciation in the first year is common for most vehicles. If your truck gets totaled in the first few months of ownership you could very well be upside down in it even if you put 10% or more down at the time of purchase. Also keep in mind that the used vehicle market is somewhat volatile in that there are mitigating factors that can hurt the value of your vehicle. Body style changes, recalls, loss of brand reputation and a whole host of other things could really hurt the value of your vehicle at anytime. Don't forget that your insurance company will do everything they can to pay as little money out of pocket as possible in the event a vehicle is totaled.

On my F-150 and F-250, I got the gap insurance for extra piece of mind. Gap insurance is pretty cheap in the grand scheme of things. For the Honda Civic Si I didn't get it. On that vehicle my trade and down payment was worth half what the vehicle retailed for so I financed very little. Being a Honda, it's unlikely that I will ever owe more money on it than it's worth.

 

Who is your truck financed with? Most credit unions offer GAP protection at almost half that. Navy Fed offers gap for $299, the catch is that you have to be financed with them

I know the dealer I purchased from did offer gap and it was refundable and also has a prorated amount if the vehicle was traded within so many years. NFCU gap was a non refundable amount.

 

USAA's Total Loss Protection (GAP) is $269.

 

It used to be free and automatically included with their loans, so that sucks a little. Still cheap tho. I stopped using them for loans because their rates stink for me. I always get a significantly lower rate with my local bank than with USAA. Sad cause I really like them.

 

I could be wrong but I recall that almost all leases include GAP protection at "no extra cost".... the current Ford lease I have on mine did include GAP. Also, I am a USAA member and at one time they would not issue a GAP policy unless you financed the vehicle with them..... that MIGHT have changed.....just saying..... AZPLAT

 

I financed through State Farm at under 3% and gap insurance is provided free with them.

 

I always get the gap for a couple years until my balance is under low NADA value. You gotta figure insurance companies are gonna find the lowest value of your vehicle if they have to give you a check.
I also get it through my credit union or insurance company. My experience is dealers like to double the price while telling you they give it to you at cost.
With my current order they want almost double for linex saying "we only charge our cost on accessories, we're not making a penny in that."

 

I have only had one vehicle that was totaled, but that seems more than most. I have USAA and they took full retail value and the price the vehicle was going for in a 300 mile radius and provided me $200 below full retail and that was a mileage discount since it had very high mileage. They are not going to offer trade in value in my experience. They offer either replacement value or pay the loan off, if there is one.

On my current vehicle, I purchased the 20% Car Replacement Assistance and GAP. If my vehicle is totaled, I receive the fair market value or the loan value, whichever is greater. Then I receive 20% of the fair market value in addition to help purchase a new vehicle. Then I receive the taxes back on the next vehicle up to the taxes on the vehicle totaled.

In my case, the fair market value of my truck is $48k, which is more than my loan. (Call them to ask what your vehicle is worth). I would receive $48k, plus $9600 to replace my vehicle, then the taxes on the next vehicle up to my precious vehicles worth ($3,300).

The cost was $269 added to the loan and $3 every 6 months. Every situation is different.

 

Nothing is "free", just not broken out.

How many people total vehicles AND are upside down at the time? A fraction of a percent of all vehicles. "PIECE OF MIND" is exactly what they hope you will think of. They prey upon your fears.

It is even less likely to be needed than an extended warranty, which is an awful investment. Buy none of it, ever, and invest that money every chance you get.

A better use of funds for someone that has a family is a 20 year term life insurance policy.

 

Sometimes gap coverage is required by the finance company. I personally take that as an indicator that I'm overpaying for something. When that happens, I step back and re-examine everything before signing anything.

When I got my '15; between the markdowns, rebates, and negotiations, I ended up at $11k less than the sticker. I have it financed through my credit union rather than FoMoCredit for a better rate, and I was told gap coverage was not recommended because I'd have difficulty putting enough miles on it make it worth less than I would ever owe.