• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

NOEL Insurance

Quietly Doing Things Better Since 1960

Call Us Today! 641-682-7533
  • Home
  • Products
    • Personal Coverage
      • Auto Insurance
      • Homeowners Insurance
      • Umbrella Insurance
      • Farm Insurance
      • Boat Insurance
  • Blog
  • Claims
  • Policy Service
  • About Us
  • Contact Us

Don’t get stuck paying for a car you no longer drive

By Kathryn Smith on March 7, 2019 0

New car insuranceBuying a new vehicle can be very exciting. I remember purchasing my first brand new vehicle. Ahh, that new car smell.

Today the average new car costs about $36,000. According to a recent Edmunds.com report, the average car loan is 69.2 months. That’s almost six years. Data also suggests that 84-month loans have increased significantly over the last several years.

Unfortunately, bigger and longer-term loans don’t have an impact on vehicle depreciation. Carfax.com showed the current depreciation value of new vehicles might drop by more than 20% in the first 12 months of ownership. Trusted Choice indicates some vehicles could depreciate as much as 30% the first year; 11% of that occurs the moment you drive off the lot.

Depreciation can be a major factor if a vehicle is totaled after an accident. And it could leave you stuck with a loan for a vehicle you can no longer drive. This is because most auto policies have “Actual Cash Value” (ACV) coverage. For instance, let’s say that a $36,000 car depreciates 11% the moment you drive off the lot. Now it’s worth only $32,040. If your car is totaled in a loss, insurance will only cover the actual cash value, or $32,040. But if your loan is still $36,000, you’ll have to pay the difference of $3,960 out of your own pocket.

Naturally, people aren’t happy in situations like these; many don’t realize how quickly vehicles depreciate. Fortunately, there’s a way to remedy this situation.

West Bend’s Home and Highway® policy offers “Auto Loan Lease” coverage to fill that gap, as do many dealerships. This is a great product to purchase, especially if you don’t have a big down payment on the new purchase. In addition, companies offer a time threshold in which to purchase this coverage. So, the next time you buy a vehicle and need a loan to do it, think about purchasing Auto Loan Lease or gap coverage. It could be one of the best insurance investments you make.

Author Bio: Nick Unger is a senior Personal Lines underwriter who has been with West Bend for 10 years. He was also an agent for 5 years. He enjoys bow hunting, baseball, football and spending time with his family. His true passion is coaching and watching his son play baseball and soccer.

SOURCE:  West Bend, Posted by Scott Stueber on Mar 5, 2019 12:48:28 PM

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Connect With Us

  • Facebook

Phone

641-682-7533 Office
641-682-8804 Fax

Address

219 W. Fourth Street
P.O. Box 370
Ottumwa, IA. 52501

Primary Companies We Represent

Aflac
Allied Insurance
American Modern Home
Auto-Owners
Concorde General
Dairyland
Employers Mutual
Farmers Mutual Hail
Foremost
Grinnell Mutual
GuideOne
Hagerty
Hartford Steam Boiler
I.M.W.C.A.
Iowa Communities Assurance Pool (ICAP)
Merchants Bonding
Midwest Mutual Insurance Company (MMIC)
National Specialty
Pekin
Progressive
QBE
Safeco
ULICO Casualty
Wellmark
West Bend Mutual
  • Facebook
  • Home
  • Products
  • Blog
  • Claims
  • Policy Service
  • About Us
  • Disclaimer
  • Privacy Policy
  • Contact Us

© 2004 – 2025 NOEL Insurance - All Rights Reserved | Developed by Ten Foot Table.