Quote:I disagree with this. Depending on the person buying the vehicle and the amount they have up front these services can be of great need.


I'm a former underwriter for a local credit union and I can't tell you how many [BLEEP] stories I've heard from the origination side when a elderly couple living off of social security loses their spouse due to age and they are stuck with a $300 car note with 4 years left on it and can't afford to pay it with only one social security income. I've heard the same number of stories where a young person purchased a new vehicle with no down payment and totaled the car a couple months later and are left with a bill because the insurance wouldn't cover the entire cost of what was left on the loan.


In each instance if the elderly couple would've had the credit life protection the entire loan note would've been paid off and the surviving spouse would've been left with a car paid for free and clear. If only the young person would've purchased the $350 gap coverage the remaining balance of their loan would've been paid off and they could shop for a new vehicle without a $3000 bill sitting on their coffee table.


It just depends on each person. If you have a decent life insurance policy or you put down a decent enough down payment up front then I agree these services won't do you any good. But in today's world the majority of people don't have a life insurance policy big enough to cover the remaining balances on large purchases or they don't have a hefty down to cover the depreciation.


If you are interested in financing definitely do it thru the credit union as others have suggested. The rates are normally unbeatable and if you are interested in the extra coverages also get those thru the credit union as well. Gap alone at a dealership can range from $600 on up and the credit union usually offers it for much less.

 

I see your point, but in both cases, it's a matter of financial discipline.  In the first case, an elderly couple shouldn't be financing anything, especially if they are living off of social security.  Social security is not a retirement plan.

 

In the second case, the young person was buying something that they could not afford.

 

As I said before.  If someone wants to buy a new/late model vehicle, they should save up for it.  $0 down type of loans is part of the reason that caused the financial crisis in 2000 and 2008.  If you can't afford at least 10% down on a purchase that you are going to finance whether it's a car or a home, then you really can't afford it.

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