When it comes to purchasing a vehicle, you have many decisions to consider. They range from the basics of make and model to insurance options and additional coverage that can both enhance your drive and affect your budget.
In the excitement of finalizing the purchase, you may be persuaded to add protection you don't fully understand – at a cost that's higher than you need to pay. It's smart to learn about add-ons that can offer potential benefits down the road, such as guaranteed asset protection (GAP) and extended warranties, before you're ready to buy.
Guaranteed asset protection
If your car is totaled and the amount you owe on the loan is greater than the value of the car, you are responsible for paying the difference. That's where GAP pays off. GAP covers the difference. The longer the term of your loan, the more valuable GAP may be. Use a GAP loan calculator to estimate payments and find out if additional payments would fit into your budget.
Car owners planning to drive their vehicle a long time may consider an extended warranty. It will pay the cost of specified repairs after the manufacturer's warranty expires. You can purchase extended warranties at any time, not just at the time of purchase. It's important to purchase a warranty that doesn't require a certain service department or dealership do the repairs, since you can't control where you will be when your car breaks down.