When you go shopping for a brand new car, you may not realize that you’re also in the market for guaranteed auto protection (GAP) insurance. GAP insurance is defined as covering the difference between the value of your car at the time of loss and the amount you owe to the lender. In other words, GAP insurance protects you if your car is totaled or stolen before you pay it off. It’s especially necessary to shop for GAP insurance if you’re not putting a lot of money down on your car, as its value begins to rapidly decrease the moment you drive it off the lot. It’s advised that car owners who put less than 20 percent down and have a lease longer than four years seriously consider investing in GAP insurance.

But how much is too much to pay? How can you know if you’re getting the best deal? How can you protect yourself from being scammed by the car dealership? These are all common questions asked by new car owners who don’t want to spend money unnecessarily.

Here are a few things you should know before you break out your wallet for GAP insurance.

Cost Factors

Experts recommend going into buying GAP insurance with an idea of how much it should cost. Buying GAP insurance at the car dealership is not recommended, as even the most trusted dealerships are known to double the average price. Instead, consult your own insurer or your credit union about GAP insurance. Costs vary depending on your record and the company you’re going through, but they’re essentially guaranteed to be far less than the dealership would charge. Also, in the event of a total vehicle loss, you’ll only have to file one claim with your insurance company.

Collision Insurance Required

To obtain GAP insurance for your new vehicle, you must already have a comprehensive insurance plan that includes collision insurance. Obviously, you need to have insurance to drive, but the most inexpensive plans don’t usually include collision. You’ll need it because the amount of your vehicle will need to be paid by your insurer in the event to a loss for your loan holder to receive GAP coverage.

You Won’t Need It Forever

It’s important to remember this so you don’t end up paying an extra monthly bill that you don’t need to be paying. GAP coverage is only necessary for about three years on new cars with a small down payment and is usually only necessary for six years at most. This is due to the fact that your car decreases steadily in value after you buy it, especially in the first five years. Keep track of this and drop the insurance when you can so you can start paying less monthly.

Guaranteed auto protection insurance is one of those things that you hope you’ll never need, but when the time comes, you’ll be glad you have it. Remember to shop smart and stay protected.