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WCPO Reports: ‘Car catches fire, single mom still owes $6,000’

Consumer reporter John Matarese at WCPO Cincinatti recently shared a real-life example of someone who didn’t get a gap waiver. Fortunately, this single mom and child are safe, but a gap waiver could have saved her the stress of having to pay off a car she could no longer drive.

“Vanessa Carnes is a single mom with dreams of becoming a nurse, to help build a better life for her and her young daughter,” the article reads. “But one month after buying a used 2010 Honda Accord, the car caught fire as the Lebanon woman was driving home.”

The car was a total loss, according to the article, and Carnes’ insurance offered her about $4,000 for the car she bought for over $10,000 just one month earlier — leaving her with thousands of dollars left to pay on the car loan.

That’s why a gap waiver is so important. If you purchase a car and it’s totaled or stolen, you still have to make good on the loan (even though the value of the car is probably much less than when you bought it). A guaranteed asset protection waiver, also known as a debt cancellation agreement, is intended to alleviate some or all of the difference between what you owe on your auto finance agreement and what your insurance will pay you.

In fact, we found in a recent Instamotor survey of Americans who’ve applied for at least one auto loan that more than 2 in 5 (42.6%) don’t know what it means to be “upside down” or “underwater” on your loan, and more than 3 in 5 (62.1%) don’t know what a gap waiver is.

Read and watch the full story here:

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