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Ask Dave

Horrific Truck Debt

Kristine has GAP insurance on her truck, and with the situation she's in, might not be able to get rid of it.

QUESTION: Kristine in Oregon wants to know if they should keep GAP insurance on their vehicle, on which they owe $50,000. Why does Dave think they cannot afford to get rid of the insurance at this time?

Dave's ANSWER: The problem is that you owe money on the truck. If you owe more on the truck than it's worth and the truck gets totaled, you don't have enough to pay off the loan. That's what GAP insurance is for. That can be a gimmick, and it can be very expensive.

It's sad that, at age 74, your husband is no more mature than that. That's absolutely ridiculous. He's going to put his whole family in jeopardy and make a horrible financial decision all because of a truck that he's wanted his whole life. That's fairly immature.

You need GAP insurance, and you also need life insurance, but I don’t know if you can get it or not because if something happens to him and you need to get rid of this truck, you are deeply in the hole. This is a decision that could make the difference between keeping your home or eating later. That's how bad this decision is. There is nothing in here that says this is right.

It's just a horrible place you guys are in. I'm so sad that he put you there. It's just pitiful. You need GAP insurance, but that's the least of your problems. You need to get rid of the truck, but I don't even know how to tell you to do that. You don't have any money, you are deeply upside down, and you probably don't have any decent credit either. It's going to get worse from here. I don't even know how you got the loan!