What Is GAP Coverage?
Guaranteed Asset Protection (GAP) covers the difference between what you owe and what your car is worth. GAP helps borrowers and lenders avoid financial loss by waiving all or a portion of the deficiency between a borrower’s auto loan payoff amount and the actual cash value of the vehicle in the event it is totaled or stolen. Having GAP protects you against a potential financial burden and safeguard your hard-earned credit.
A few situations to consider GAP coverage:
- You financed a car beyond a 60-month term
- Negative equity was rolled into the new loan from a past auto loan
- If your down payment was less than 20 percent