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Car sales, like any other business, has a jargon all its own. For instance, take the phrase, "being upside down." When a salesman tells you this, he means that you owe more on your trade than what it is worth. However you are not alone. When I was selling cars, I saw people in this predicament every week. Owing more than what your trade is worth can be costly when attempting to buy another vehicle. But it can have disastrous consequences if your car is wrecked and then totaled by your insurance company. This is where GAP insurance comes to the rescue. GAP offers piece of mind. Yet is is arguably the most underrated form of protection available to the customer.

GAP means Guaranteed Auto Protection. And just what does that mean? I will explain. Suppose you have an accident and your insurance company totals your car. The insurer then writes you a check for the value of the car. But suppose you owe more than what the vehicle is worth. This means there is a shortfall or "Gap" between the actual value of your car and the balance of the financial obligation to the bank. GAP insurance fills the void and eliminates the shortfall so that you owe the bank nothing.

Let us follow an example that shows GAP insurance in action. Suppose you buy a brand new Jeep Grand Cherokee for $30,000. After tax, plates, incidentals and finance charges, your total obligation is $36,000. Six months later, you have an accident and your vehicle is deemed as being beyond repair. Your insurance company assesses your Jeep for $25,000 and writes a check for that amount. But let's say that after making six payments on the Jeep, you still owe $33,000. Well if your insurance company sent you a check for the value of your vehicle, which was $25,000, and $33,000 is still owed, who is liable for the remaining $8,000? You are. Of course, if you had planned ahead and got GAP insurance, there would be no obligation. In other words, you would owe absolutely nothing.

Is GAP insurance for everyone? Not necessarily. If you purchase a vehicle and put down 20 or 30 percent against the finance, you will probably not need GAP. What you are doing here is buying down the vehicle's rate of depreciation when it hits the hardest, your first year of ownership. If you are financing for three years or less, chances are you will not need GAP. Of course, you need to do your calculations to be sure. If you are rolling debt from your trade into the finance of the new vehicle, or, you are putting little or no money down and

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