Definition of 'Gap Insurance'
Gap insurance is a type of insurance that helps to pay for the difference between the actual cash value of your car and the amount you owe on your car loan. This can be helpful if your car is totaled or stolen, and you owe more on your loan than the car is worth.
Gap insurance is typically purchased at the same time as you finance your car. It can be added to your loan for a monthly fee, or you can purchase it as a standalone policy.
The cost of gap insurance varies depending on the make, model, and year of your car, as well as your credit score. However, it is typically a relatively inexpensive way to protect yourself from financial loss in the event of a total loss.
Gap insurance is not a requirement, but it can be a wise investment for people who are concerned about owing more on their car than it is worth. If you are considering purchasing gap insurance, be sure to compare quotes from multiple companies before making a decision.
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