If your car in Las Vegas is totaled or stolen, you may think that if you have collision or comprehensive insurance, you’ll be completely covered. You might expect that your insurance will cover everything, and you’ll be able to buy another car. That’s not necessarily the case, however. You may owe more money on your car loan than the value your insurance company places on your vehicle. This is a situation known as “being underwater” on your loan, and it’s quite common as vehicle prices have risen and loan terms have gotten longer.
Collision or comprehensive insurance will pay you what your insurer says your car is currently worth if it’s totaled or stolen, which may be less than what you still owe on it. So, if you bought your car several months ago for $20,000, your insurer may say it’s now only worth $18,000 because it’s used. However, you may owe $19,500 and find yourself on the hook for the extra $1,500.
Get the Right Insurance for Your Car in Las Vegas
What is gap coverage?
To protect yourself against the situation mentioned above, consider buying gap coverage, which is insurance that pays the difference between what you owe on your car loan and the current value of your vehicle. This type of extra coverage applies in addition to your collision or comprehensive insurance, and it can be bought at the dealership when you’re financing your car.
When can gap coverage be beneficial?
If any of the following apply to your situation, gap coverage may be beneficial:
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- You made a small down payment – or none – when you financed your car.If you made little or no down payment, you may be immediately upside down on your loan. This is especially true if you’re financing additional costs such as tax and registration.
- You’ve taken out a long car loan.Generally, a loan of 60 months of more takes a greater period of time to reach the point where your car’s value and the amount you owe on your loan are equal. At first, much of your car payments go toward interest on the loan.
- You’ll be driving your car a lot.The more miles you put on your car, the quicker it loses value. If you’re planning to drive a lot, the miles can add up and your car may lose value faster than average.
If you’re interested in buying a car in Las Vegas and finding out more about gap insurance, visit Valley Automall in Henderson, NV or contact us today at 702-570-2257. We have 19 auto dealerships in one convenient location, and you can check out our cars online before visiting. Our dealers can work gap insurance into the sales process when you’re buying a car in Las Vegas to help protect your finances.