How does GAP insurance work when a car is totaled?

Author's Note

I came into this article knowing that buying a new car is one of the least-savvy investments you can make, and after spending some time thinking about GAP insurance, I now think it's even crazier. For example, if you go out and buy a new car for, say, $50,000, you know that by the time you're finished paying it off, the car will only be worth a fraction of what you originally paid. It's the nature of cars. But even with this in mind, thousands of people not only purchase new cars, but they also get GAP insurance on top of all the other expenses, just to make sure they don't reallyend up on the losing end of things. I'll take the bus, thank you.

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