[Cindy]

I understand the policy is to pay off the loan if the car is totaled and the loan amount doesn’t match the car value. Policy is $800. What I don’t understand is this is NOT the loan company.

What does the dealer have to do with this?

They’ll already get their money when she gets a loan.

Has anyone heard of this?

[Jessica]

She can get gap insurance through her regular auto insurer, likely for much less. Don’t buy that from the dealer.

[Danny]

Dealers sell add ons and get paid for it.

[Michael]

Dealers get fees for selling all sorts of products. If your son’s friend put down any sort a reasonable down payment (10-20%) and didn’t finance the car for 8-10 years, his odds of being upside down and pretty low.

[Kevin]

Whenever a dealer puts that much pressure to sell anything, it’s because they get a fat profit from it and the salesman or finance manager gets a percentage.

They know he wants the car and they already have him. Now they turn the screws, pull out the doomsday playbook to tell you about everything that can go wrong, and they get you to shell out more money. Same exact thing happened to my wife when we bought a Honda.

The finance manager was trying to sell us on an extended warranty package by basically just saying Honda’s warranty doesn’t cover anything so you need an extended warranty… she was trashing her employer in front of the customer to make more money.

[Danny]

Have your friend contact his auto insurance to add GAP insurance. What most people forget about is the interest in that GAP insurance since it is put into the loan. The best suggestion is to pay as much as possible on the loan until the loan matches the car value.

[Author]

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