Guaranteed Auto Protection
What is Guaranteed Auto
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 todayís 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 carís 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.