When GAP Is a Must
Posted on | September 30, 2009 |
Gap insurance is one of those financial tools that will not be appreciated by every single driver, nor will be the necessity for that in every single case. Still, there are situations when taking out GAP insurance is a must and there is no way one can avoid that. So what are the obligatory circumstances? First, any car loan that a car buyer may take. In that case one needs to remember that unless the purchased car is paid in full, it technically and legally belongs to the manufacturer or the finance organisation which financed it. Because of the fact that many unexpected events may happen to the vehicle on loan, the financial institution needs to secure the car as the investment. As a result, any loan agreement includes gap insurance. Another condition when gap insurance is a must is taking a car on lease. The situation is much the same as with the loan. Here, however, it is mainly the buyer, or the lessee to be more precise, who may be the potential beneficiary. In case of any damage to the car resulting in write-off, the driver does not have to pay any money to the finance company and any financial shortfall is covered by GAP. While taking a car on credit the driver will also be advised to take out gap insurance. Here, however, the decision to buy GAP remains much at the buyer’s discretion and is not mandatory in the majority of cases.