In addition to the products already mentioned, the FM may also recommend that you purchase GAP Insurance on your loan. Unfortunately, I have the difficult task of informing all of you out there that cars, trucks, SUVs, minivans, etc. are not a good investment - they are a necessity!! Vehicles get us from point A to point B in whatever style we're accustomed. Because vehicles are not a lucrative investment and all vehicles depreciate after driving them off the lot, you should take a serious look at protecting your investment. In the event your vehicle is ever stolen and or involved in an accident and your insurance company deems it a "total loss," your insurance company is going to pay the lien holder (the bank you financed with) what they feel is the "appropriate" book value of your vehicle at that time. Sadly enough, their idea of "appropriate" and yours are usually two different things. A lot of people also seem to be "emotionally attached" to their vehicles thinking that they are worth more than they actually are. Anyway, when the entire loan is not paid in full by the insurance company, the remaining amount owed is called a deficiency balance. Guess who is responsible for paying this? I think you know.

If this is not paid in full to the lien holder, it WILL be reported to the credit bureaus and will adversely affect your credit rating.

Gap insurance pays the difference between what your insurance company pays and the actual amount owed to pay the debt in full. Keep in mind that if you put down 40% or more as an initial down payment, you should not require gap protection because you are in a good equity position in the value of your vehicle. Unfortunately, in the "real world" the majority of people purchasing and financing a vehicle normally try to do so with the least amount of money out of pocket as possible, thus leaving them in that negative equity or "upside down" situation. I have to say that gap insurance is not only a good investment, but also a relatively inexpensive one that may save you thousands of dollars down the road, but keep in mind that the FM is going to try to sell you this product with considerable mark up also.

A much less expensive alternative may be to purchase gap insurance online where you can not only avoid purchasing from the dealer, but also not include that as more money you need to finance into your loan. To find out if Gap Insurance is right for you and get a Free Price Quote, please click link below:

Article 2: Get the gap if you're upside-down