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Monday, June 29, 2009

Gap Protection

For most people, buying a car will be one of the largest single purchases of their life. In addition to the daunting task of picking the right car with the correct trim package, you also have to arrange financing and secure insurance coverage before driving off of the lot. Unfortunately, the minute the vehicle is purchased it begins depreciating such that it may not be insured for what you owe in the event the car is totaled or stolen. Most people think that when they buy “full coverage” insurance that the car loan will be paid off in the event that the car is later totaled. In many instances this assumption is incorrect.

In the early part of a vehicle loan, most people are “upside down” in their vehicle. That means the value of the vehicle is less than what is owed is owed to the finance company. When this occurs there is a “gap” between what the insurance company will pay for the total loss and what is actually owed to the finance company. There is, however, a special kind of protection called “Gap Coverage” that is designed to protect consumers from being upside down in the event of a total loss. Simply put, the protection pays the “gap” between what the insurance company pays (minus your deductible) to the finance company for the loss and what you owe the finance company. In many cases there is a gap because the actual cash value of the vehicle is far less that what is owed on the loan.
Here is how it happens:

Basic Information:

What you owe the bank when car is totaled: $23,000.00
Actual value (what the insurance pays you) $20,000.00
Primary insurance deductible $1,000.00

Insurance Payment:

Actual Value: $20,000
Minus Customer Deductible -$1,000
=============
Amount Insurance Pays $19,000

What you owe the bank $23,000
Minus amount paid by Insurance - $19,000
=============
Amount needed to payoff car loan (“GAP”) $4,000

Gap coverage would pay this $4,000 in the event there was a total loss. Without Gap, another $4,000 would have to be paid to the finance company before purchasing another vehicle or $4,000 negative equity would have to be rolled into another loan agreement.

Because of the large amount of customers that are now financing negative equity or taking low annual percentage rates in lieu of rebates, Gap protection is becoming more popular. In fact, in Louisiana, every customer purchasing a vehicle with credit must be offered the opportunity to purchase or decline Gap coverage. Buyers who choose to put little or no money down on a vehicle, or those who roll unpaid balances into their new loan, probably need Gap coverage. The same is true for those buyers who extend their loan terms beyond 48 months or add expensive accessories to the vehicle and roll the amount into the loan agreement.

Gap coverage can be purchased from many places but is easiest to obtain from the car dealership at the time you purchase your vehicle. The amount of the coverage is purchased separately but may be included in your finance agreement. The charge varies but is usually paid for with a single premium charge for the coverage. In many cases, Gap coverage bought at the dealership will also cover the amount of any insurance deductible. Other Gap policies may not offer deductible protection so it is best to ask before purchasing. Finally, Gap will not cover amounts already paid to the lender, past due premiums, personal property taxes or other charges. If you think you may need Gap coverage, contact your local new car dealer for more information.

Thursday, June 4, 2009

Walker Automotive Selected as a Key Dealer By GM

By Lawrence S. Searcy, Jr.

Walker Automotive is pleased to announce that on June 1, 2009 it was selected as a General Motors “Key Dealer” for its Buick and GMC brands. On June 1, 2009 General Motors filed for Chapter 11 bankruptcy protection with the Federal Bankruptcy Court in the Southern District of New York. In doing so, GM hopes to reinvent itself with fewer, stronger and a more properly located dealer network. GM’s selection of Walker Automotive as a Key Dealer shows the confidence that GM has in Walker being part of the new GM.

Throughout the years, Walker Automotive has endured many changes in the automotive business. This year represents Walker’s 90th birthday and Walker is excited about the next 90 years. GM’s announcement means that Walker will continue to sell and service GMC and Buick vehicles well into the future. The Pontiac brand will be phased out over the next 18 months but Walker will continue to provide sales support, warranty service and parts on the all Pontiac vehicles into the foreseeable future.

“We remain committed to honesty and integrity in every facet of our business and it is this philosophy that has earned our company an outstanding reputation and longevity,” said Foster Walker III, President of Walker Automotive. Mr. Walker emphasized that as a fourth generation family company, Walker Automotive always tries to do what is in the best interest of its customers. “Our customers make it possible for us to be and stay in business and we realize that customer loyalty is the key to generations of success. We believe that we are rewarded for our efforts by the vast majority of our customers who are repeat and lifetime buyers.”

Walker was founded in 1919 as Alexandria Auto Company, Inc. by Foster Walker Sr. After returning from World War I, Foster Walker Sr. began selling Durant, Reo and Star automobiles from a gas station in Downtown Alexandria. That business eventually became Walker Oldsmobile Company and is now run by Foster Walker III. Ninety years after its inception the dealership has expanded from its meager origins to three locations, 8 manufacturers, three service departments and a collision center. Over the last 9 decades, Walker has won numerous national and factory awards for all aspects of its business and offers new and pre-owned vehicles ranging from quality entry level models to German luxury vehicles.