Depreciation Protection

Couple in a new car

Protect your investment!

Soooo, you just bought an awesome new car valued at $25,000. Because you’re a negotiator ninja, you were able to talk the dealer into selling it to you for only $22,000. Because you’re also a savings ninja, you were able to put $7,000 down. (Go, you!) And you got a $15,000 vehicle loan to cover the rest.

You’re on your way home with your sparkly new car, and some yahoo slams into you. (Didn’t see that coming, did you?) You’re fine. The yahoo’s fine. The cars, not so much. Now what?

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 $25,000 because it loses value as soon as you drive it off the lot). So they pay off your $15,000 loan balance and send you a check for the remaining $5,000.

But wait a minute… you’re in a worse position now! You only have $5,000 for a down payment, instead of $7,000. And you have to negotiate a deal all over again. (It wasn’t easy to get the dealer to knock off $3,000!)

Here’s how it plays out with Depreciation Protection.

Of course, you have comprehensive insurance. Your insurer values your totaled vehicle at $20,000, so they pay off the loan for $15,000 and send you a check for $5,000. (Sounds familiar so far, right? 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 its value for the lifetime of your loan! Let’s figure this out: How much equity do you have in the car? Well, there’s the $3,000 you were able to negotiate. (That counts.) Then there’s the $7,000 you paid to the dealer. That’s $10,000 already.

With the right-sized* Depreciation Protection, you would get $10,000. (Now you’re sittin’ pretty with $15,000 to put down on a new vehicle. Sweeeeeet!)

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 in the first minute you own 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 know more? Watch this snazzy video! (Or you can contact us!)

*The amount of Depreciation Protection you need will depend upon your individual circumstances. Our financial counselors will work with you to determine the appropriate amount of coverage. (Because we’re financial ninjas!)

Well hello again! Welcome to your third installment of Back To the Basics: Credit Style. I hope you’re learning lots about the three little numbers that rule the financial world! I think today’s topic is really going to peek your…
Switching made simple... so you have time for the important stuff. Switching to Linn Area Credit Union is now easier than ever... with ClickSWITCHTM -- the fast, secure, and free way to switch your automatic payments and direct deposits! (That's…