If you’re in the market for used Honda cars in Wilkes-Barre, PA, you may be considering GAP insurance. GAP insurance is a special type of protection that helps to prevent unexpected automotive expenses. Here at MotorWorld Honda, our finance experts are happy to explain the situations where purchasing it can help.
What is GAP Insurance?
GAP insurance, also known as Guaranteed Asset Protection, is an optional auto insurance policy designed to cover you in the event of a total loss. If your financed vehicle is stolen or totaled, a standard insurance provider only pays out the actual cash value of the car. However, GAP insurance steps in to cover the remaining difference between the insurance payout and your outstanding loan balance.
How Depreciation Affects Pre-Owned Honda Cars
Unlike brand-new cars, which lose a significant chunk of their value immediately after leaving the showroom, pre-owned Honda cars experience much slower depreciation. Because the previous owner of the car absorbed the initial drop in value, your loan amount stays closely aligned with the car’s actual value. If you made a typical down payment and keep your loan term reasonably short, your regular car insurance plan should be enough to pay off the lender if your car gets totaled.
When to Choose GAP Insurance
Sometimes your auto loan will leave you owing more than the vehicle is worth, a situation that is called being underwater on your loan. Financing a used car with zero down, taking a longer-term loan (60 to 72 months), or rolling fees into the contract will immediately leave you underwater. If this is your situation, buying GAP coverage makes perfect sense, as it can help you avoid paying out-of-pocket for a totaled car.
Browse Our Used Honda Cars in Wilkes-Barre, PA
Here at MotorWorld Honda, our team of friendly used and new car dealers is ready to get you behind the wheel of a used Honda car that fits your needs. Our finance experts are also standing by to help you explore GAP insurance and other automotive protection options. Visit us today!
