It's almost time to trade in your old car for a new one. While you are on a scheduled payment plan with a dealership, you may actually be able to cover the cost of the vehicle or your car loan sooner than later.
There's a possibility that you can collect a GAP insurance refund if you pay off your vehicle early and get money back for any prepaid coverage you may have. In this article, we'll take a closer look at who can possibly get a refund from their GAP insurance coverage this year.
What is a GAP insurance policy?
An insurance provider may offer up a GAP insurance policy to car owners who finance vehicles through their own banks or through a lender partnership with dealerships. Car buyers who purchase their vehicle for little to no down payment, with license and tax fees on their car loan, may end up owing more on their ride than it's actually worth. If a loan amount exceeds the value of the vehicle, gap insurance provides value.
Guaranteed Auto Protection, or GAP, insurance covers the amount between what you owe on the car and what it's currently worth. Car insurance is designed to cover the actual cash value, or ACV, of the vehicle. However, depreciation can be steep for a new car.
GAP insurance is most helpful for cars financed for more than 48 months. These long-term finance agreements help people who otherwise couldn't afford the monthly car payments. With longer finance terms, the amount of time they owe more on their car than it is worth will be longer.
Who can get a GAP insurance refund?
A GAP insurance refund is only received when you pay for the vehicle early, in which case you no longer need your gap insurance policy. You may also be entitled to some GAP refund if you pay off a vehicle loan early as well. Be sure to contact your car insurance company or financing company with proof that the automobile is paid off in full.
Gap insurance is also a form of auto protection insurance that can cover a total loss in the event of a fire, theft, floods, tornadoes, hurricanes, etc. Any loss normally handled by collision insurance is also covered by a GAP insurance coverage policy. If a GAP policy covers a deductible, the deductible amount is not refunded back to the vehicle owner. Instead, it is applied to the unpaid car loan balance.
For unused gap coverage, a vehicle owner can get a partial gap refund. Premiums for gap insurance are calculated on both the value of the car and the term of a vehicle loan. Your insurer has to repay you any unused premiums that were paid on the gap insurance policy.
When is the right time for a GAP refund?
If you need a GAP refund, be sure to wait until the car is no longer legally in your possession before canceling your gap insurance. You will need to take the appropriate steps with your insurance provider in order to get the necessary paperwork for that refund to be processed.
Beyond verification in paperwork, you can just feel the timing is right based on your Zodiac sign. When you look at Sagittarius traits, no dream is too big for them. This fire sign allures a dreamer's thought process, such as looking for the next sweet new ride of theirs.
For example, a Virgo may be a little nitpicky with an impatience that seeks a specific type of new car. If your zodiac sign is Scorpio, you can be free-spirited and fun. That sense of humor and adventurous spirit can translate to finding a new ride for the ultimate joy ride — you can figure out what's in the stars for you.
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