I paid $4,500 for an extended car warranty and gap insurance, and I have no regrets

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• I recently bought a used car, and I ended up getting gap coverage and an extended warranty.
• If your car is totaled while you're still paying it off, gap coverage can be extremely valuable.
• My extended warranty ensures that any repairs I need will be affordable.

I recently traded in my car for a new-to-me car from CarMax. I normally avoid offers for things like extended warranties, but this time, I decided to get gap insurance. I also got CarMax's extended repair service, MaxCare. I spent over $4,500 for these two add-ons.

I initially went in with a budget of what I wanted to spend on my vehicle purchase — my add-ons put me well over that amount by almost $5,000. However, I don't regret it at all.

Gap insurance is crucial

Gap insurance is a type of car insurance that covers the difference between what you owe on your car loan or lease and the car's actual cash value in the event that your vehicle is totaled or stolen.

Cars tend to depreciate in value quickly after you drive them off the lot. If your car is totaled or stolen, your standard auto insurance policy will pay out the car's ACV, which is the current market value of the vehicle at the time of the incident. This amount can be significantly less than what you originally paid for the car or what you still owe on your loan or lease.

If that's the case, you will be stuck paying the difference out of your own pocket if you still owe money on your car at the time. So, for example, let's say you bought a car for $30,000. The current loan balance is $25,000 when the car gets totaled in an accident, but the actual cash value is only $20,000, which is what insurance agrees to pay. You'd be stuck paying the remaining $5,000 on your own.

This is something that actually happened to a friend of mine when she got into an accident two years ago and totaled her leased car.

She still had to pay the lease amount on a car she no longer had, and her insurance didn't cover the entire amount. Unfortunately, she also had to deal with a lawsuit that the other driver filed because her insurance didn't offer enough to cover their injuries and losses.

Unfortunately, there are also a lot of car accidents in my area and on the interstate. So, for me, paying $1,060 extra for gap coverage and also checking to make sure my auto insurance coverage is sufficient is well worth it.

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MaxCare seemed worth the cost

The next thing I opted into was MaxCare, an extended service plan offered by CarMax. MaxCare provides coverage for unexpected vehicle repairs after the manufacturer's warranty has expired, protecting you from high out-of-pocket repair costs.

MaxCare covers a wide range of components, including the engine, transmission, drivetrain, electrical systems, and more. It also includes coverage for systems like air conditioning and heating, steering, suspension, and brakes. However, it doesn't cover regular maintenance items, wear-and-tear parts (like brake pads and tires), or cosmetic repairs.

They offered me flexible plan options, and I chose to set it up to cover unexpected repairs and major issues that come up over the next 100,000 miles. This added $3,500 to my loan amount. For coverage to kick in, I just need to pay a $300 deductible.

My husband's car recently needed some electrical work done, which cost us around $800 alone. Any repairs we've gotten done in the past have always totaled more than $300 when you include the cost of labor, parts, and other fees.

Plus, major mechanical issues or engine problems can cost several thousand dollars to repair. When that happens, many people just opt for a whole new car.

I love staying under budget, but I'd rather pay a little now than a lot later if anything unexpected happens with my car. However, I still like that these benefits were optional since everyone's situation and preferences are different.

I hope to keep this car for a long time, but if I'm ever in the market to purchase again, I plan to be mindful of extra costs that go into the price of a loan, as they can quickly add up.