What is GAP?
If a vehicle is totaled or stolen, the borrower's primary insurance company settlement can be significantly less than the outstanding loan balance. This may create a deficiency balance or a "gap" resulting in a serious financial hardship for your borrower. The "gap" may even jeopardize repayment of the loan. GAP is designed to relieve your borrower of the responsibility for the remainder of the loan balance that their primary insurance carrier does not cover.
What does GAP cover?
GAP covers the difference between the borrower's outstanding loan balance and the actual cash value of the vehicle (primary insurance company settlement) less any deductions. GAP also covers up to $1,000 of the borrower's deductible if there is a "gap" after the primary insurance settlement is paid. It is covered as part of the deficiency balance and is not paid directly to the borrower.
- Low cost protection with a 60-day free look.
- Eliminates the out-of-pocket expense for the remaining loan balance after loss settlement.
- Helps the borrower avoid financial hardship and afford a replacement vehicle.
- Prevents deficiency balance from being added to new loan.
- Helps protect the borrower's credit rating.