What in the world is a 'VSI' fee on a car loan?

[ironk]

We are buying a new car, and the loan contract that is pending has something called 'VSI' for $395 attached to it. What is that, and do i even need it/and or is it a good idea to have it? Our loan for the car is at 10,000 at 4.3 apr.

Thanks.

 

[Injury]

this one is about cycles not cars... but may help.

http://www.7cycles.com/1006.html

edit: a 10,000 loan sounds like it's going to be a 4 or more year loan. You probably want the VSI for a measly ~$400.
It means that should something happen to the car (totalled, theft, etc.) that you aren't liable for the remaining payment on the car. Think of how bad it would suck if after a year of owning it some n00b teen nailed you and destroyed the car. Sure, you get a check to cover the costs of the car, but you'd still have to make payments on it if you don't have VSI. (at least that's how I understood it.) At that point the money you are given for the car would be much less than the money still owed, provided you pay only the amount due every month.

final edit: Please don't take my advice until further consulting an expert. I am NOT familiar with these, I only knew what it was after googling it.

 

[ironk]

correct me if i am wrong, but that article is saying to stay away from VSI?? Plus its somewhat confusing, he says

" It means that if your $6000 cycle has a balance on the loan of $750 and it is stolen, the VSI will pay off the $750. If you actually had your own insurance and the same thing happened, you would have been paid closer to the $7000 amount and you would then give your loan company the $750 to pay off the loan."

Say what?? if you owe 750 on it, why would your insurance pay you $7000? Or is he saying that if you didn't have regular insurance and only VIS, you get nothing back for your car if its destroyed in a accident?

 

It's basicaly gap coverage, right? Correct me if I'm wrong.

 

[ironk]

nope. What its saying is that if you total your car, and lets say you owe $6,000 on the loan, they will pay the entire remaining loan ($6,000 in this case). AFAIK, gap only covers the 'gap' between the current market value and the original new car value. It does nothing with the what you have remaining on the loan. But then again, i am probaly wrong about gap insurance, so in other words, i really don't know.