‘They regret it’: Dealership worker shares whether you should get gap insurance

A car salesman shared his views on GAP insurance, telling people, "It's there to protect you," but some cynically think it's there to get him a better commission on sales.

The video comes from TikTok creator TJ Mitchell (@tjthecarplug), who bills himself as "your favorite car salesman," with more than 23,000 views on the TikTok video that went up on the platform Aug. 23. The video, nearly a minute long, with Kendrick Lamar's inescapable "Not Like Us" playing in the background, exhorts the virtues of buying gap insurance.

"When a car dealership offers you gap insurance," he insists to open the video, "it's there to protect you."

He goes on to explain, "You will ending owing way more on that car than it's worth, unless you put a lot of money down and get some kind of positive equity in the car that you're buying."

How does gap insurance work?

He breaks down how it works with an example. Let's say someone buys a car with no money down. Two months down the road, that person totals the car, and depreciation is such that the insurance company deems the value to be $15,000.

But if the loan still has $20,000 outstanding, that person will need to make up that remaining $5,000. But with gap insurance, the gap between what insurance pays and paying off the rest of the loan (minus the deductible on the policy if the car is totaled in an accident or stolen) is paid for the policy holder.

Mitchell emphasized, in those scenarios, "It can still affect your credit!"

He then implored viewers, "Get gap insurance!"

Who really needs gap insurance?

A Progressive article on the topic laid out some situations in which people should consider gap insurance. Those include:

• If you're leasing a car, as it might be required per terms of the lease
• If your down payment is less than 20% of the sale price
• If you're buying a used car, depending on its value relative to the loan
• If you have a longer financing term
• If your particular car has a higher depreciation rate
• If you rollover one loan to buy another car

The article adds, "Once you add gap insurance, it applies for the duration of your policy. However, you won't need gap coverage for the entire length of the loan. Once you owe less than what the car is worth, you can drop the insurance."

Wait, not so fast

Despite this advice, some commenters cautioned against getting gap insurance—or, at least, getting it from the dealership.

One offered, "Get through you insurance company; way way cheaper!"

Another said, "Dealer wants $3k for gap. Credit union sells it for $250."

Someone else weighed in, "Gap is good but the paper work is a pain to get."

One suggested, as an alternative, "Put good money down on a car that holds value and go with a short term of 36 months."

But others extolled the virtues of gap insurance, saying, "I cannot tell you how many people I talk to on a daily basis who did not get gap insurance and they regret it."

Another added, "I had a customer last night roll about $4k of negative equity, put $0 down, and didn't want to listen how even just GAP would be helpful to them."

@tjthecarplug Ine if the mostbimoortant add-ons, especially buying used #fyp #fypage #fypシ゚viral #cardealership #carsaleslife #carsalesman ♬ Not Like Us - Kendrick Lamar

The Daily Dot has reached out to the creator via Instagram and TikTok direct messages.

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