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Depreciation Protection

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Protect your investment!

Picture this—you just bought that beautiful new car you’ve been dreaming about (valued at $25,000).  Because you’re such an awesome negotiator, you were able to talk the dealer into selling it to you for $22,000.  Because you’re such an awesome saver—you were able to put $7,000 down. And you got a $15,000 vehicle loan to cover the rest.  

You’re on your way home in your new car, and BAM someone slams into you!  You’re fine and the person who hit you is also fine—but the cards are not so fine.  What happens now?

Here’s your typical scenario without Depreciation Protection—

Of course you have comprehensive insurance.  Your insurer values your totaled vehicle at $20,000 (instead of the $25,000 because it loses value the minute you drive it off the lot).  So they pay off your $15,000 loan balance and send you the check for the other $5,000.

But hold on a second—you’re in a worse position now!  You only have $5,000 for a down payment, instead of the $7,000.  And you have to negotiate a deal all over again. (It wasn’t that easy to get that additional $3,000 knocked off the price!)

Here’s your typical scenario with Depreciation Protection—

Of course you have comprehensive insurance.  Your insurer values your totaled vehicle at $20,000 (instead of the $25,000 because it loses value the minute you drive it off the lot).  So they pay off your $15,000 loan balance and send you the check for the other $5,000. (Sounds familiar—but here’s where everything changes.)

In addition to your regular insurance, you purchased Depreciation Protection, which locked in the value of your vehicle at $25,000.  Your car will maintain it’s value for the lifetime of your loan!  Let’s figure this out—How much equity do you have in your car? Well there’s the $3,000 you were able to negotiate.  Then there’s the $7,000 you put down—so that’s $10,000 already.

With the right-sized *Depreciation Protection, you would get $10,000.  (Now that’s more like it—things are looking up with $15,000 to put down on a new vehicle!)

The Depreciation Protection payout will never be more than the amount you owe on your loan.  So, say you have an accident three years after you bought your car instead of the first day you got it.  You’ve made three years of payments, so you only owe $8,953. That’s how much Depreciation Protection would pay you.  

You can add Depreciation Protection to an existing car loan, or you can get it at the same time you get your loan.  

Want to learn more?  Watch this little video.

*The amount of Depreciation Protection you need will depend on your individual circumstances.  Our financial counselors will work with you to determine the appropriate amount of coverage.