HOMEABOUT RESOURCES ACCOUNT VIEWCONTACTAPPLY HERE INSURANCE READ TIME: 3 MIN Gap Insurance for Leased Cars One of the attractions of leasing a car is that it generally requires a much smaller upfront outlay of cash compared to what purchasing a car might require. This preference to minimize an upfront cash payment may mean that some individuals may also roll other associated costs into the lease payment, including the capital-reduction amount (or down payment). While the predictability of a known payment amount for a set period of time may be convenient, rolling up such costs into the lease payment may create a financial risk in the event that you experience a total loss from an accident or similar misfortune. In some cases, what you owe may exceed the value of the car and the amount of the reimbursement you receive.1 You can protect yourself against this potential risk by buying gap insurance, which is designed to cover the difference between what conventional auto insurance covers and what you owe at the time of the loss. Gap insurance may be added to your existing auto policy or purchased separately. How Much Gap Insurance Do I Need? The gap between the value of the car and what you may owe is predicated on a number of variables, such as the depreciation of the car, the number of payments made, and even the nature of the deal you negotiated. As you might have guessed, the relationship between these variables means that the amount of gap insurance you may need can vary over time. To obtain adequate coverage, you should contact your insurance agent and work with him or her to determine the necessary coverage amount. 1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite. Share | Related Content Stay Safe with a B.O.P. At Your Back Learn about the advantages of Business Owner Policies with this highly educational and fun animated video. Insuring Your Business Against Cyber Liability 90% of small businesses in the U.S. don't protect their data from cyber attacks. Is your business at risk? Protecting Those Who Matter Most The importance of life insurance, how it works, and how much coverage you need. Contact Office: (831) 438-7223 Fax: (831) 438-6335 chris@difi.com Have A Question About This Topic? Name Email Question Check the background of your financial professional on FINRA's BrokerCheck. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named representative, broker - dealer, state - or SEC - registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. We take protecting your data and privacy very seriously. As of January 1, 2020 the California Consumer Privacy Act (CCPA) suggests the following link as an extra measure to safeguard your data: Do not sell my personal information. Copyright 2021 FMG Suite. The Advisors of Diversified Financial are Registered Representatives with and Securities offered through LPL Financial, Member FINRA & SIPC. Investment advice offered through Diversified Financial, a registered investment advisor and separate entity from LPL Financial. The LPL Financial representative associated with this website may discuss and/or transact securities business only with residents of the following states: AZ, CA, CO, FL, IL, NM, OH, OR, WA. Contact Diversified Financial Office: (831) 438-7223 Fax: (831) 438-6335 108 Whispering Pines Drive Suite 130 Scotts Valley, CA 95066 chris@difi.com CA Insurance License #0G98071 Quick Links Retirement Investment Estate Insurance Tax Money Lifestyle All Articles All Videos All Calculators All Presentations