Do you cross your fingers each time you get behind the wheel – just hoping to hear a vroom rather than a sputter when you turn the key? If you finance a car, you are expected to pay back the funds on schedule – regardless of the condition. Sometimes the loan may even last longer than the car.
Here are a few ways to avoid being in a pinch if your loan outlives your car:
Extended warranty: Most new cars come with a warranty. However, those warranties don’t last forever. If you plan on keeping your car for as long as possible, it may be wise to look into purchasing an extended warranty for future car trouble.
Maintenance: Have you witnessed the person driving a car with smoke pluming from the exhaust pipe? Don’t be that person! Keep up on scheduled maintenance to keep your car running well and to diagnose any potential problems.
Guaranteed Asset Protection “GAP” coverage: Unless you come up with a large down payment, chances are you will, at some point, owe more on the loan than the car is worth. If you crash your car, your insurance company will reimburse you only up to the insured value of the car. But if you have GAP coverage, the insurance company will reimburse you enough after an insurable event to pay off the loan.