Should I Buy GAP Insurance?July 7, 2021
With car prices continuing to rise, many people have a concern about the value of their car. If this is a concern you have, buying GAP insurance with your auto loan is a great option.
What is GAP insurance?
GAP, or Guaranteed Asset Protection, is a voluntary, non-insurance program that works with your standard car insurance. It protects the “gap” between the vehicle’s value and the amount you still owe on your loan if your vehicle is stolen or totaled.
Why should I buy GAP insurance?
Once you drive off the lot, your vehicle is already worth less. Since most insurance companies base their claim payments on the current value of your vehicle, your loan or lease could be higher than the value of your vehicle in the event of a total loss. Which means you could be responsible to pay off your loan if insurance doesn’t cover it all.
Whether you’re buying a new or used vehicle, GAP can help relieve your worries, and the financial impact on your wallet, if the unexpected happens.
GAP insurance waives the difference between your primary insurance company’s settlement and the payoff of your loan balance, up to a 125% loan to value maximum (LTV) and subject to limitations and conditions.*
Here’s an example of how GAP could work for you:
Let’s say you’re in an accident and your one-year-old financed vehicle is a total loss and beyond repair.
|Your loan balance||$15,000|
|Your insurance company settlement based on your vehicle’s market value at time of loss:||$11,000|
|Your insurance deductible:||$1,000|
|Total amount you owe without GAP:||$5,000|
|Total amount you owe with GAP:||$0|
Where can I buy GAP insurance?
You can buy GAP insurance in multiple places. Many dealerships will offer you GAP insurance, but their price is typically higher. Emery offers GAP insurance with our auto loans at a fraction of the cost at the dealership. Ask your loan officer about GAP insurance during your loan application!
The purchase of GAP is optional. Whether or not you purchase this product will not affect your application for credit or the terms of any existing credit agreement you have.
We will give you additional information before you are required to pay for GAP. This information will include a copy of the GAP Waiver Addendum containing the terms and conditions of GAP. Eligibility requirements, conditions, limitations and exclusions. There are eligible requirements, conditions, limitations and exclusions that could prevent you from receiving benefits under the GAP Waiver Addendum. You should carefully read the GAP Waiver Addendum for a full explanation of the terms, conditions, limitations and exclusions. This brochure is not a contract.
*Less delinquent payments, late charges, refundable service warrant contracts and other insurance related charges. See the GAP Waiver Addendum for all terms, limitations and exclusions.