Understanding BMW GAP insurance is an important part of financing your new car here at BMW of Asheville. This protection plan is designed to safeguard you from a major financial risk in the event of a total loss due to theft or accident. Here at BMW of Asheville, our team of finance experts believes in full transparency, and we want to help drivers understand what GAP insurance is and when obtaining it is a smart choice.
What is GAP Insurance?
GAP stands for Guaranteed Asset Protection. The purpose of GAP insurance is to cover the “gap” between what your auto insurance pays out, or the vehicle’s Actual Cash Value, and what you still owe on your auto loan. Because new cars depreciate fastest in the first few years of life, it’s common to be upside down (owe more than the car is worth) on your loan. GAP insurance is designed to cover this difference.
When Do You Need BMW GAP Insurance?
While it’s not required for every vehicle purchase, GAP insurance is a recommended option for the following financing scenarios:
- Small Down Payment: If you put down less than 20 percent, you are more likely to be upside down on your loan for the first few years.
- Rolling Over Negative Equity: If you traded in a vehicle that you were already upside down on, that negative equity is added to your new loan, creating a gap.
- Long Loan Term: Loan terms of 60, 72, or 84 months mean that you build equity much more slowly, increasing the time you are in the “gap” position.
Protect Your BMW Investment in Asheville, NC
GAP insurance provides you with peace of mind and can potentially save you thousands of dollars in out-of-pocket expenses. To learn more about GAP insurance, speak to the finance experts here at BMW of Asheville.