Buying a new car (or even an expensive used car) can be very exciting. It is a big investment, though. You’ll need to count on that new car for probably many years! What if were gone tomorrow?!
Not to bring you down from the cloud that you’re on after a new purchase… but you should probably think carefully about the value of your car and what will happen if there is an accident. You see, the moment you drive that car off the lot, the value will drop… a lot. It goes from being a new car to a used car literally the moment the dealer orders a title for you. That drop in value isn’t all that bad when you factor it over many years… but if the car is gone just days after the purchase, you lose the ability to spread that loss over time and it is often deeply impactful even to very financially stable customers.
What can you do to prevent this sudden loss? Here at Kelly Insurance, most of our carriers offer total loss replacement cost on newer cars. That’s the easiest way! In a nutshell, this endorsement will afford you the cost new of a new car… often even a model year newer. Be sure to ask your agent if this interests you.
Another option requires a little creativity. Before paying for the car, consider financing all of the purchase price (that’s right, don’t put any money or trade down). Take the full value of the car, plus the taxes, and all the fees, and wrap it all into your loan. Then, buy gap coverage! That’s right, there is another coverage called loan and lease gap that will pay off your loan even though the value is significantly lower (* certain limits do apply of course). This is a very reasonable approach to protecting yourself. And gap protection is really inexpensive. It generally only costs a few dollars per month on your insurance and you really only need to buy it for about half of the life of your loan. If you’d like more information, reach out to your agent. We’ll work diligently to educate you on the process and will share in your joy at buying a new car!… without all that risk!