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Gap Car Insurance Coverage Washington DC

Reader’s Question:

Do I need to carry gap car insurance coverage here in Washington, DC as long as I have a loan on my car?

Hadley

Washington, DC

In general, new vehicles are likely to drop more of their value in the first year in comparison to used vehicles. On the average, the car industry points out that a vehicle drops 11 to 20% percent of its value during the first year. Say a vehicle costs approximately $30,000, the value it loses within the first year is $3,300 to $6,000. But some automobiles hold on to their value better than others. For instance, while gas prices are exorbitant, reselling costs for fuel efficient vehicles rise.

Since you have a car loan in Washington, DC, you may not have paid a lot for the vehicle during the first year. And this is the period when the disparity between what you have a loan from and the car’s worth can be the most. The vehicle’s value reduction starts to slow during the next two to three years, then even out during the fourth or fifth year of possession. This is the time that you can think about cancelling the gap car insurance coverage because the value of the vehicle and what you have a loan from have generally aligned. You also have to keep in mind that if you are purchasing a new vehicle, the most famous new vehicles are the most famous used vehicles, which means they cling to their value better.

Tags: car, car insurance, gap insurance