‘She owed the bank $16,000’: Woman refuses GAP insurance after car salesman warns her. Then she totals it before first payment

Car seller Joseph Rodriguez (@jrodsellscars) wants you to get GAP insurance on new car purchases. He posted a viral TikTok with over 274,000 views explaining why.

In the clip, he shared a customer's experience with a recent vehicle purchase. Her car was totaled in a wreck shortly after buying it. And because she didn't get GAP, she suddenly found herself on the hook for $3,500—and no car.

Totaled car

Rodriguez begins his video with a text overlay that summarizes the situation: "Customer totaled her car before her first payment."

He says, "The previous car she purchased was an Elantra. And she bought the car from me. Took time out, got her approved and I told her. I was very specific: do not leave that finance office without getting GAP insurance."

However, he says the customer texted him that she got her car totaled.

Rodriguez added that the customer had her "total loss letter from her insurance."

However, a problem arose after she came into the dealership to settle the payout on her vehicle.

Rodriguez says, "She comes in and we look through her previous contract to see if she had GAP. And she did not get it. Her insurance valued her Elantra at $12,500 and she owed the bank about $16,000."

Consequently, the salesperson states, she was on the hook for thousands of dollars. "That's a $3,500 swing. So even though she doesn't have that car anymore, she still owes that money," he continues.

New ride

Rodriguez says he and his manager worked to get the woman into a different car. "Now in regards to the potential car that we're trying to get into. I had my manager look through the inventory to see if there's anything that would work," he says. "He tried for a Sonata."

An additional obstacle arose: The newer vehicle was "2,500 more" than the Elantra. And because she still owed $3,500 on the GAP-less totaled vehicle, it now cost her $6,000 more. This differential caused a significant spike in her monthly payments.

"After about 10 minutes, no luck at all. We struck out I could not get into another car," he says. "This is why I tell you guys do not leave the dealership without GAP insurance."

Why GAP?

There's a reason why many financial analysts say cars are almost always the worst investment a person can make. And this is especially true of brand-new vehicles. That's because they immediately depreciate in value the second they're bought off a dealership lot.

According to Lending Tree, 20% of a new car's value is diminished within the first year of ownership. And after five years, that new vehicle's going to be worth about 40% of what you paid for it. Furthermore, depending on how much your salesperson negotiated on the car's price, you'll bear the brunt of that depreciation. For instance, let's say you paid MSRP and immediately totaled the car.

Like the woman in this TikToker's story, that amount of depreciation will be significantly higher. If she had negotiated a better price, then that "gap" would have been lower. I.e. the differential between what she paid and the quoted "totaled" payout from insurance. This is due to her insurance provider evaluating the car based on its immediate post-purchase assessment.

GAP insurance, in this case, would've covered that depreciated price difference. Meaning she wouldn't have had to pay out of pocket for the post-accident costs.

Buy used

Moreover, unless the deal on a new vehicle is extremely compelling, used cars are almost always the way to go. That's because the bulk of a new car's depreciation occurs in its first three years of use. Consequently, financial advisors often advise purchasing used vehicles.

Of course, there are always worries about warranties expiring on these vehicles. This means that if a major drivetrain component fails, the buyer is left footing those service costs. However, there are ways to mitigate used car regret by considering several factors before making a purchase.

Firstly, opting for brands with demonstrable histories of reliability is paramount. Throngs of mechanics have praised JDM brands such as Toyota, Honda, and Mazda for dependable long-term use. Additionally, Consumer Reports recently ranked another Japanese automaker, Subaru, as #1 for reliability.

Popular Korean brands Hyundai and Kia are often subjects of controversy on social media. Numerous auto enthusiasts and service workers alike have differing opinions on these vehicles. Some maintain that problems such as paint defects dissuade them from purchasing these brands. Others would argue that inherent drivetrain problems are the reasons Kias and Hyundais receive so much hate.

Maintenance records

Conversely, however, some state the aforementioned brands are well-built cars. And that the only reason why used ones end up in junkyards with no visible damage is due to sales practices. That's because, according to the Korean automaker proponents, sales specials on these vehicles attract specific buying demographics.

Meaning that consumers who purchase these vehicles are mainly concerned with low monthly payments. Subsequently, they don't factor in costs for prompt and stringent maintenance protocols.

This brings us to another important factor while purchasing a used car: A vehicle's history. Records indicating the frequency of service dates, along with mileage count should be considered when making a purchase. Furthermore, whether or not a car has been in an accident is a primary concern as well. This is where heading to a trusted mechanic for a vehicle inspection prior to purchase comes in handy.

@jrodsellscars Don’t leave without GAP 🙅🏾‍♂️ #jrodsellscars #carsalesman #approved #dealership #carbuyingtips ♬ original sound - Joseph Rodriguez

Look at local Google reviews for shops that have been in business for years. Paying an independent auto service tech $100 to $150 to conduct this inspection could save you money in the long run.

Or, if you're buying new, get GAP insurance on the car. Just so you don't end up in a similar position to the TikToker mentioned in Rodriguez's video.

The Daily Dot has reached out to Rodriguez via TikTok Instagram direct message for further comment.

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The post ‘She owed the bank $16,000’: Woman refuses GAP insurance after car salesman warns her. Then she totals it before first payment appeared first on The Daily Dot.

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