What is Guaranteed Auto Protection?
Guaranteed Auto Protection, or GAP, offers protection against financial liability for individuals who finance a new or used vehicle. GAP protects against financial loss in the event that your vehicle is damaged beyond repair (totaled) or stolen and never recovered. With GAP, the covered deficiency balance is then waived.
Example: Based on a sale price of $18,000, after one year the value of your auto would be $10,000, the amount you still owed would be $15,000. That leaves a gap of $5,000 that you are responsible for.
Sale price $18,000
Down payment $0
Amount financed $18,000
Loan term in years 5
Annual interest rate 12%
What Does GAP Cover?
In today’s automobile market, during the first few years that you own your vehicle, your loan/lease balance can be higher than the actual value of your car, as a result of depreciation. As your car’s value declines, your loan/lease balance can be significantly higher. If your car were stolen, or totaled in an accident, you would be liable to pay the difference between your insurance settlement and your outstanding loan/lease balance.
GAP covers the difference between the market value of your vehicle and the loan/lease balance, less delinquent payments, late charges, refundable service warranty contracts and other insurance related charges. In the event a deficiency exists, our program will cover your insurance deductible, up to $1,000.
Loan Balance after One Year = $15,000
Your vehicle's ACV = $11,000
Your deductible = $1,000
Insurance settlement = $10,000
The "gap" = $5,000
GAP pays $5,000
Without GAP coverage, you would be required to pay this $5,000 in order to pay off your loan/lease balance.
Ask your loan officer for more information about Guaranteed Auto Protection.