7
Is gap/rti worth it ?
- Thread starter LFTMON
- Start date
GTI Jake
Autocross Champion
- Location
- Charlotte, NC
I believe you're correct. Gap pays out the remaining amount of the loan back to the bank. Doesn't matter what you paid you're out that money
Finglonga
Drag Racing Champion
- Location
- Stafford, UK, Earth, Solar System.
Worth having BUT not the VW one as you can find it cheaper elsewhere unless you can get it thrown into the deal for free.
GTI Jake
Autocross Champion
- Location
- Charlotte, NC
Don't get me wrong I have Gap on my car, it's not a bad thing situationally, but you're correct in that you won't get your investment back, it only protects you from owing money on a car you no longer have
kkingma
Ready to race!
- Location
- Tacoma, WA
Unfortunately I took advantage of my Gap in the past. The car was only 3 weeks old when I totaled it. Gap saved me from paying $4k. Insurence covered the value of the car, gap covered the balance of the loan.
crxgator
Autocross Champion
- Location
- Raleigh, NC
- Car(s)
- All the MQBs
I'm guessing you had a $4k in negative equity?
Reggie Enchilada
Autocross Newbie
- Location
- nowhere
- Car(s)
- yes
I think that its worth it for the peace of mind
State Farm Bank includes free gap insurance
While talking to my insurance agent for a GTI quote, she mentioned that State Farm Bank includes what they call "payoff protector".
It works like gap insurance.
https://www.statefarm.com/finances/banking/loans/payoff-protector
Right now, the APR is 2.54% for excellent credit, (essentially only for those that can prove they don't need it, but I digress).
Concerning the OP, keep in mind, the down payment reduces what the Gap insurance pays.
Gap refers to the difference between what the insurance pays (blue book at the time of loss), and your remaining loan balance on the vehicle itself.
The portion of the down payment that covers sales tax, dealer fees, title, extra add-ons like treatments for paint, fabric etc. DOESN"T count toward covering the gap.
As a rough example, say you put down $7000 on a $25,000 car.
Gap insurance is probably worthless because you've already covered around a $5000 gap. ($7,000 minus $2,000 for sales tax, fees etc).
It doesn't get your down payment back either, so make sure you need it before paying for it.
Don't know how gap insurance works when you roll your previous vehicle balance into the loan (upside down).
BTW, you can check edmunds.com True Cost to Own for how much your car depreciates and compare it to your loan amortization chart for the remaining balance on your loan to get an idea of what you need.
While talking to my insurance agent for a GTI quote, she mentioned that State Farm Bank includes what they call "payoff protector".
It works like gap insurance.
https://www.statefarm.com/finances/banking/loans/payoff-protector
Right now, the APR is 2.54% for excellent credit, (essentially only for those that can prove they don't need it, but I digress).
Concerning the OP, keep in mind, the down payment reduces what the Gap insurance pays.
Gap refers to the difference between what the insurance pays (blue book at the time of loss), and your remaining loan balance on the vehicle itself.
The portion of the down payment that covers sales tax, dealer fees, title, extra add-ons like treatments for paint, fabric etc. DOESN"T count toward covering the gap.
As a rough example, say you put down $7000 on a $25,000 car.
Gap insurance is probably worthless because you've already covered around a $5000 gap. ($7,000 minus $2,000 for sales tax, fees etc).
It doesn't get your down payment back either, so make sure you need it before paying for it.
Don't know how gap insurance works when you roll your previous vehicle balance into the loan (upside down).
BTW, you can check edmunds.com True Cost to Own for how much your car depreciates and compare it to your loan amortization chart for the remaining balance on your loan to get an idea of what you need.
CiviclyConverting
New member
- Location
- Rockville
SpinKix, Thanks for the helpful listing of the factors to consider when analyzing gap insurance purchases. I bet insurers do better on gap sale profits after years 2-3 when car owners forget tgey are paying gap premiums but don't bother reviewing the decision and keep paying despite no advantage.
Gap insurance decision eally does seem to depend on a lot of factors (down payment, how one finances the car purchase, timing of loss event, etc) but the uncertainty in regard to the depreciation rate (generally higher in years 1-3 it seems, but could be magnified by how dieselgate affects resale value and whether VW continues adding new products such as GTI Sport) could be a significant factor with VWs and Golf & GTIs in particular.
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The newer the car, the faster the depreciation.
Average estimates, varies by brand/model:
Drive off lot = 11%
After first year = 25%
After 3 years from purchase = 46%
After 5 years it's lost 63% / worth 37% the purchase price.
I found a good explanation of the trade-offs of gap insurance.
Stuff that didn't occur to me. Apparently financing your old car loan balance into the new car loan IS covered by gap.
Just a higher premium. Good reason for buying gap.
Scroll down to "Do You Need Gap Insurance" :
http://www.moneycrashers.com/gap-insurance-cars-worth-it/
Thing is, modern cars have really improved to the point where it's not so bad driving an older car.
They still drive well, ride nice, have car play, good stereo.
Even reasonable repair costs are worth it looking at those figures above.
That's where the GTI shines. There aren't many ways to vastly improve on it. It's good at just about everything except fitting large families.
Sure, the 2017.5 / 2018? will probably have (when they get around to announcing it) LED headlights, a fancy all digital dash, cooler looking tail lights more horsepower (but notice, the same torque, right?).
The MQB platform is getting replaced, but how much of an improvement will it be, really.
It's not like hovercraft are coming to the LA Auto show.
So, I'm planning on driving my 5 year old Focus a bit longer.
BUT... it's a GTI next.
Or a hovercraft. I''ll know in December, lol.
Average estimates, varies by brand/model:
Drive off lot = 11%
After first year = 25%
After 3 years from purchase = 46%
After 5 years it's lost 63% / worth 37% the purchase price.
I found a good explanation of the trade-offs of gap insurance.
Stuff that didn't occur to me. Apparently financing your old car loan balance into the new car loan IS covered by gap.
Just a higher premium. Good reason for buying gap.
Scroll down to "Do You Need Gap Insurance" :
http://www.moneycrashers.com/gap-insurance-cars-worth-it/
Thing is, modern cars have really improved to the point where it's not so bad driving an older car.
They still drive well, ride nice, have car play, good stereo.
Even reasonable repair costs are worth it looking at those figures above.
That's where the GTI shines. There aren't many ways to vastly improve on it. It's good at just about everything except fitting large families.
Sure, the 2017.5 / 2018? will probably have (when they get around to announcing it) LED headlights, a fancy all digital dash, cooler looking tail lights more horsepower (but notice, the same torque, right?).
The MQB platform is getting replaced, but how much of an improvement will it be, really.
It's not like hovercraft are coming to the LA Auto show.
So, I'm planning on driving my 5 year old Focus a bit longer.
BUT... it's a GTI next.
Or a hovercraft. I''ll know in December, lol.
Last edited:
CiviclyConverting
New member
- Location
- Rockville
Good nugget about moneycrashers.com, thanks!
Yes, at this point in the '17 model year and considering how a 17.5 release and new '18 features could add to '17's depreciation, I too am holding. It would take a really good deal to bring home a '17.
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