No one ever plans to be in a major accident. However, if the unexpected happens and your vehicle is declared a “total loss,” the financial aftermath can be just as jarring as the collision itself. At Zimbrick Automotive, we believe that being an informed driver is the best way to stay protected. Understanding how to bridge the financial divide between your insurance payout and your loan balance is essential.
What Is a Total Loss?
In the automotive world, a vehicle is typically considered a total loss when the cost of repairs exceeds a certain percentage of its current market value. While you might expect your standard collision coverage to handle the rest, there is often a catch. Standard insurance policies only pay out the actual cash value (ACV) of the car at the time of the incident—not the amount you originally paid or the total remaining on your loan.
The Problem: The “Gap” in Coverage
New vehicles can depreciate significantly the moment they leave the lot. If you financed your car with a low down payment or a long-term loan, you might find yourself “underwater,” meaning you owe more than the car is currently worth. If your car is totaled, you are still legally responsible for the remaining loan balance, even if you no longer have a vehicle to drive.
This is where gap insurance becomes your financial safety net. It is designed to cover the difference between your primary insurance settlement and the outstanding balance on you auto loan.
Why You Should Consider Gap Coverage
- Protection Against Depreciation: It shields you from the rapid loss of value that occurs in the first few years of ownership.
- Peace of Mind: You won’t be forced to pay thousands of dollars out of pocket for a car that is sitting in a salvage yard.
- Affordable Security: Adding this protection is often a small monthly cost that provides significant long-term value.
Drive With Confidence at Zimbrick
Whether you are browsing our used cars for sale in Madison, WI, or driving home in a brand-new model, we want you to feel secure in your investment. Our finance experts are here to help you navigate your options and ensure you have the right “safety net” in place.
Are you ready to find your next vehicle with a team that puts your protection first? Contact Zimbrick Automotive today to learn more about our inventory and specialized financing protections.
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