“When you purchase a new car, its value depreciates over time. This means you could pay $24,000 for your vehicle now, but it may only be worth $20,400 in a year. If your vehicle is in an accident and marked a total loss, you could end up owing more on your loan than what your insurance paid out.
Many car insurance companies offer gap insurance. You may be able to find a carrier that will sell you gap insurance for less than your lender’s cost of $12 a month.