05 Sep Hot Air Balloon, Gap Ins, Labor Day
Welcome to the Newsletter
Rana Law Group Newsletter
In this issue:
- Hot Air Balloon Happenings
- Do I Need Gap Insurance?
- Just for Fun: Labor Day Camping
Hot Air Balloon Happenings
If you read last month’s newsletter, you learned that our new assistant Sarah flies hot air balloons in her spare time. There are two upcoming events happening this month in the ballooning community. These are great opportunities to get out and enjoy the fall weather.
The Great Forest Park Balloon Race – The glow is on 9/20 and the race is on 9/21.
New Haven Hot Air Balloon Race – The glow is on 9/27 and the race is on 9/28.
Do I Need Gap Insurance When Purchasing a New Vehicle?
If you are in a car wreck and your vehicle is totaled out, the insurance company is only required to pay you the fair market value of your vehicle, NOT the value of your loan. In some cases, the value of your loan may exceed the fair market value of your vehicle (aka you are upside down on your loan). Gap insurance is optional coverage you purchase at the time you buy a vehicle to cover the difference between your loan and the value of the vehicle. It is meant to protect you from having to pay the remainder of your loan that the insurance company is not liable for covering.
Is gap insurance worth purchasing? In my opinion, generally no. It typically costs several thousand dollars and only protects you in the event very specific things happen to you: (1) Your vehicle gets totaled out, and (2) the value of your vehicle is less than the loan amount. Most of the time, your vehicle is going to be repairable, so #1 is not as likely. Also, at some point, between your down payment and the payments you make, the difference between the loan and the value of your vehicle should stabilize to the point where your vehicle is worth more than your outstanding loan balance.
However, let’s say you happen to find yourself in this unlucky situation. In my experience, the amount a person is upside down generally does not exceed the several thousand dollars it costs for gap insurance, so it is probably better to risk this situation not arising and, if it does, just pay out of pocket. I typically recommend a client tries to buy another vehicle from the place they purchased the first vehicle to see if they will roll the old loan into a new loan. Usually, since the dealership wants to make another sale, they will work with you on the financing. The insurance company will provide a sales tax waiver for the amount of the total loss so you are not stuck paying the full sales tax again. For the vast majority of people who purchase gap insurance, they will not get any value.
Just for Fun: Labor Day Camping
For several years now, my wife and I have been going to Table Rock Lake to tent camp with friends. This year, we had three other families who were able to enjoy the perfect weather with us. While summer is coming to an end, I look forward to cooler, mosquito-free nights as we head into fall. What a great view of the lake!
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