Updated: Apr 5
Tax Season is The New Car Season
There is no doubt that the first half of the year is the time to shop for a car. Typically Taxes hit around end of February for the early birds, and the latest is June for those who do things last minute. Of course this year there is an exception because the last day to file taxes (April 15th) has been extended (May 7th). The fact remains the same though, this is the time everyone in town is driving around in their new car or is planning to buy a car. I am hoping this post will still do some justice, especially for those who do things last minute. This post is either for people who do things last minute or people who may use a future tax return to buy a car.
Knowledge Is Power
There is an importance in going in to any financial decision with knowledge. Most of the time when people look for a car, they just go to the car lot and know what they want. Knowing what you want to purchase is the smallest fraction of things to think about. First, if you all follow my work you should know that knowing your budget, and your credit are a part of the financial decision. Next knowing interest rates, thinking about monthly payments, insurance and all of those factors are a part of the process. There is one more thing I want to talk about though, that most people don't know about and don't discuss with the car salesman (or anyone else for that matter). GAP Insurance! Don't worry it's not something everyone knows about and I know I sure didn't until I worked at a bank, so don't feel bad. This is something that should be discussed though! Especially if you are a car salesman and you are reading this... start teaching your customers about GAP INSURANCE!
First let's clear up what GAP stands for:
Guaranteed Asset Protection Insurance. This is an optional insurance, no one is obligated to get it but it's definitely something to take your time and think about. GAP ( to put it simply) is insurance to cover the “gap” between the financed amount owed on their car and their car's actual cash value, if the car was to get totaled beyond repair and cannot be driven. To be clear, if you get in an accident (God Forbid) and you car looks BAD but you can still drive it, GAP will not cover the amount owed on your car. For Gap to kick in you absolutely cannot be able to drive your car. Now that you know what it is, it's time to think about if you want to purchase it. Personally, I think it is because ...well I have the luck of the Irish if you know what I mean. I would rather be covered just in case, instead of taking chances. Typically I am the type of person who doesn't want to buy warranties or any extra protection " In case something happens", but this is my one exception. Another thing to think about when it comes to GAP Insurance is if you want to pay it in payments or do you want to pay it all up front. Again, Personally I would pay for it all up front because when you make payments there is interest on it vs if you pay it in full there is no interest to be paid on it. There's so much that goes behind this decision and I hope you take the time to either research it, or book a session with me.
I will leave you with one more thing to think about if you are still debating if you want GAP or not. The amount you put for a down payment and the amount & length of the loan makes a big difference. The bigger the loan the bigger the risk if you have an accident and do not have GAP Insurance.
I hope this post has been helpful to you and if you have any questions Please reach out.
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