As we enter the fourth quarter, now is the time to consider the yearly cycle of auto sales. There are two scenarios that become more frequent toward the end of any calendar year that may impact you:
- Dealers offer extreme financing incentives (often $0 down) as they attempt to clear out inventory from the previous year.
- Many consumers use end-of-year bonuses to make down payments on luxury vehicles or large trucks, which have increased in cost over the years.
According to Forbes, year-over-year average down payment amounts are up 3.8 percent. That may sound like consumers are in a better position by putting more money down on average, but this increase is often not enough to account for new car price inflation, increasing interest rates and loan terms that now average over 69 months.
Based on market trends over recent years, coupled with the seasonal boost in new car sales, now is an excellent time to focus on ensuring you are sufficiently covered by Auto Loan/Lease coverage, or “Gap” coverage. Gap coverage protects you in the event that you owe more on your loan/lease than the value of your auto at the time of loss.
There are three reasons why Gap coverage is a great option for those purchasing new vehicles:
- Gap coverage is affordable.
- Many consumers do not fully understand the contractual nuances of their insurance policy or loan agreement and don’t realize this exposure exists. Discussing this need with your agent up front prevents difficult conversations in the event of a claim.
- The need for Gap coverage is increasing as consumers are willing to pay more for vehicles they desire, and are willing to accept longer terms and higher interest rates to obtain those vehicles.
As soon as most financed vehicles leave the dealership, the owner is upside-down in their financial position on that vehicle. Gap coverage remedies this risk and is available in most states. Ask your independent Motorists agent about Gap coverage today.