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One of the most common financing questions that we receive here at Southwest INFINITI is regarding gap insurance in Texas. Gap insurance, shorthand for Guaranteed Asset Protection insurance, is a special type of insurance that helps protect you against total loss scenarios. The team of finance professionals at Southwest INFINITI explains how gap insurance works to keep your vehicle protected, as well as whether or not it is required.
Does Texas State Law Mandate Gap Coverage?
State regulations in Texas do not legally require gap insurance for vehicle owners. Standard car insurance policies only require minimum liability coverage to cover damage to other vehicles in an accident. However, financial institutions, leasing companies, and lenders sometimes require gap insurance as a mandatory condition of your financing agreement. This requirement protects the lender’s financial interest if the vehicle is totaled or stolen before your loan balance is paid down.
Why You Should Consider Gap Insurance
Gap insurance covers the negative equity “gap” between your auto insurer’s actual cash value payout and your total remaining loan balance. Though it is not required in Texas, there are still good reasons to purchase it:
- Depreciation Protection: New INFINITI models lose their value the fastest during the first few years of ownership, creating financial issues if a total loss occurs.
- Longer Loan Terms: Spreading payments across 60 to 72 months slows down your principal reduction, which makes gap insurance more beneficial.
- Low Down Payment Buffer: Putting down less than 20 percent leaves you with a larger balance to pay off. Standard collision insurance may not cover this.
Consult Our INFINITI Finance Experts in Houston, TX
The finance team at Southwest INFINITI is happy to help you decide if gap insurance is right for you. Visit us today to determine if this optional coverage can help you.
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