Gap insurance?
Three Wheelin'
Joined: May 2016
Posts: 1,310
Likes: 154
From: PAC NW
I was once offered "Gap insurance" on a Toyota Tacoma that had been marked down. I was buying it at $1500 over wholesale, and putting $15,000 down on a $30,000 purchase (the truck was nearly new and loaded; the used Tacoma market makes very little sense sometimes). The finance guy offered me Gap Insurance, and I asked him "why? The truck will be paid off completely before it is only worth $15,000!" (Tacomas are famously strong for resale; I have made money while driving one for 2 years and 30,000 miles).
Basically, they can peddle the "insurance" to anyone, even if they cannot possibly use it. There must be some uninformed buyers out there! I wonder if they offer the option to people paying cash? That would be pretty funny!
Basically, they can peddle the "insurance" to anyone, even if they cannot possibly use it. There must be some uninformed buyers out there! I wonder if they offer the option to people paying cash? That would be pretty funny!
Burning Brakes
Joined: Jan 2018
Posts: 886
Likes: 406
From: Houston, TX
I still operate on my Dad’s principle. If you can’t pay cash you can’t afford it. My mantra that I’ve passed down to my son as well.
In cars you tend to buy pre-owned (never used) but you’re free from payments that free’s up cash for mods! I did buy a new Macan S for the wife this past Christmas, still cash but worth it. Happy wife is a happy, you know.
In cars you tend to buy pre-owned (never used) but you’re free from payments that free’s up cash for mods! I did buy a new Macan S for the wife this past Christmas, still cash but worth it. Happy wife is a happy, you know.
Not to be contentious, but one thing is being able to afford it, and a different story is if it makes financial sense to pay cash. If you can generate a higher rate of return on your investment than the cost of the loan, it makes no sense whatsoever to pay cash. I was able to get my 911 financed at 1.95% while at the same time, the absolute worst return I could get would be a CD at 2.1% Even in that case, it would make sense to take the loan and put the cash on a CD. Now, if you can invest that cash at something like 7%, you will be making a substantially better return than the cost of the loan. In a bull market, you will definitely don't want to pay cash.
Now, regarding the GAP insurance, as someone else said, it is definitely a sucker bet.
My first Macan GTS was totaled 3 months after I bought it. My insurance paid me more than what I paid for the Macan. Nearly $12K above sticker price. Considering I got a 5% off invoice, it was a good outcome in the end. No Gap needed.
Racer
Joined: May 2002
Posts: 485
Likes: 22
From: Atlanta, GA
Not to be contentious, but one thing is being able to afford it, and a different story is if it makes financial sense to pay cash. If you can generate a higher rate of return on your investment than the cost of the loan, it makes no sense whatsoever to pay cash. I was able to get my 911 financed at 1.95% while at the same time, the absolute worst return I could get would be a CD at 2.1% Even in that case, it would make sense to take the loan and put the cash on a CD. Now, if you can invest that cash at something like 7%, you will be making a substantially better return than the cost of the loan. In a bull market, you will definitely don't want to pay cash.
And the #1 thing - the wife is on board with the plans in all cases
