Nissan Gap Insurance: Everything You Need To Know
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Losing your car due to an accident or theft is always a devastating experience. Furthermore, the financial burden resulting from the loss can be overwhelming, mainly when insurance only covers the car’s current market value at the time of the loss.
Getting Nissan Gap insurance can help avoid this financial headache.
We’ll take a deep dive into Nissan gap insurance for today’s post. What is gap insurance? How does it work? Do you need it? Let’s take a look.
What is Nissan Gap Insurance?
Standard car insurance protects you financially while on the road. When your vehicle gets totaled or stolen and written off as a total loss, insurance will reimburse your car but only based on its current value at the time of the claim.
Because cars quickly depreciate, there’s a good chance the loan balance will exceed the car’s current market value. This situation is called going “upside-down” or “underwater” on your car loan. In this case, the insurance settlement won’t be enough to cover the remaining loan balance, and the difference will be paid out-of-pocket by you.
The Nissan Guaranteed Auto Protection Insurance (GAP) is a supplemental insurance policy that bridges the difference between the remaining loan balance and the vehicle’s insured value.
Without the Nissan gap insurance, you could be on the hook for up to thousands of dollars, especially if your vehicle doesn’t hold its value well. GAP is optional and can be added on top of your insurance coverage.
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Nissan Gap Insurance: How It Works
Gap insurance isn’t that complicated, but we’ve given an example below to help you better understand how it works.
Let’s say you bought a Nissan Frontier truck with a sticker price of $28,000. You placed a down payment of 10%, bringing the loan cost down to $25,200. With a 5-year auto loan term and 0% interest (unlikely, but to keep things simple), you’re looking at monthly payments of $420. After a year of payment, your loan balance is $20,160.
Unfortunately, your Frontier got wrecked, and your insurance provider declared it as a total loss. You’ll be compensated based on the Frontier’s current market value per your insurance policy. Most vehicles depreciate by 20% during the first year of ownership. Applying that to your Frontier, its current market value by the time the accident is $22,400.
At this point, your insurance check is more than enough to cover the total remaining loan balance, and you’ll have an extra $2,240 for buying a new car. No problem here, but what if your car model doesn’t hold its value too well?
Let’s say your vehicle lost 30% of its value in the first year, bringing its market value to $19,600 – the amount your insurance will cover. As you can see, the check can’t fully pay for the remaining balance, and you’re short of $560, and that’s money coming out of your pocket. The Nissan gap insurance waives the $560, so there are no out-of-pocket costs for you.
Below, we’ve outlined how much you’ll pay with and without gap insurance, using the examples above.
Without gap insurance…
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With Nissan gap insurance…
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Do I Need Nissan Gap Insurance?
First, let’s know more about Nissan’s gap coverage.
Each car manufacturer has its unique gap coverage programs. In Nissan’s case, the program is called Security+Plus GAP Plan, and it offers the following benefits:
- 150% max eligibility limit
- 84 months max available term
- Up to $1,000 auto insurance deductible covered
- Coverage available for new and pre-owned vehicles
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When You Might Need Gap Insurance
Do you need this add-on coverage for your Nissan vehicles? Here are the scenarios where it’s wise to get gap insurance.
- Made less than 20% down payment - If you put down a smaller down payment, you’ll be underwater as soon as you leave the car lot. According to NerdWallet, a car’s value depreciates by 20% to 30% by the end of the year.
- Financed for longer than 60 months - A lengthy loan term takes a while to pay off and build equity, but depreciation remains the same. Experts recommend gap insurance coverage if your loan terms are longer than five years or 60 months.
- Leased vehicle - Most lease agreements will include gap insurance, either as a free add-on or optional for extra fees.
- Purchased a vehicle that depreciates faster - Some cars hold their value better than others. If you bought a car that doesn’t retain its value in the long term, you’d want to get gap insurance.
- High-mileage driver - The more miles you put on the odometer, the faster your car depreciates. If you drive long miles for work or just like your occasional road trips, gap insurance makes the most sense, especially when Nissan’s gap payouts have no mileage limits.
In some cases, some gap insurance coverage may cover the rolled-over negative equity from an old loan to a new one. However, the insurer may limit the coverage depending on certain factors like loan term length and the down payment on the new loan.
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Nissan Gap Insurance: How Much Does It Cost?
The yearly cost of gap insurance may vary from one provider to the next. The average price of gap insurance ranges from $20 to $40 annually, on top of your regular policy.
For Nissan customers looking for gap insurance, some dealerships may charge a one-time fee of $400 to $700 for extra coverage, making it the most expensive route. Moreover, since the one-time fee is usually included with your auto loan, you’ll end up paying more due to interest.
Is Nissan Gap Insurance worth it?
If one of the scenarios we’ve outlined above applies to you, getting gap insurance is certainly worth the extra dollars. It’s an added layer of financial protection that gives you peace of mind.
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