Guaranteed Asset Protection (GAP) is like an airbag for your vehicle loan.

If your vehicle is totaled or stolen, GAP could help fill the gap between what your car insurance will pay and what you owe on your loan, to cushion you against sudden out-of-pocket expenses.  These expenses could cost you thousands of dollars.

If your vehicle is totaled, you could end up owing more on your loan than your vehicle is worth.  This is known as being “upside down” on your loan. As vehicles become more expensive and people take out more loans for longer periods of time, their risk of being “upside down” has increased.  Americans have signed up for a record amount of vehicle loan debt for a record length of time.  Almost one out of every four car buyers took out a 6 to 7-year loan—which has extended their risk of being upside down to around five and half years. ¹

The reason for this problem is that most car insurance companies will reimburse you only for “fair market value.” Fair market value is the common resale value for a specific car (based on make, model, age, mileage, condition, demand, etc.) in a specific market.  In some ways, fair market value doesn’t seem fair if your car is totaled, because you could end up owing more on your loan than the insurance company says your vehicle is worth.

The greatest gap between your loan value and the fair market value usually occurs in the first years of your loan. The second you drive your new car off the lot, it drops in value and keeps dropping. Value often drops 78% in one year, and 46% in 5 years. ² But your loan value doesn’t decrease as fast, creating a gap. It may no longer be enough to protect your car, you may want to consider optional loan protection as well.

Don’t let a wrecked car wreck your finances!  Get GAP.

For more details, view the brochure or call us at (845) 452-7323.

1   Experian Study, 1st quarter 2014, from Daily Finance Financial Literacy, “Auto Buyers Set New Records, Load Up On Longer Loans” 

2   % for a typical vehicle in America.  Edmunds, “How long should my vehicle loan be?

Your purchase of MEMBER’S CHOICE™ Guaranteed Asset Protection (GAP) is optional and will not affect your application for credit or the terms of any credit agreement required to obtain a loan. Certain eligibility requirements, conditions, and exclusions may apply. Please contact your loan representative, or refer to the GAP Waiver Agreement for a full explanation of the terms of GAP. If you choose GAP, adding the product fee to your loan amount will increase the cost of GAP. You may cancel the protection at any time. If you cancel protection within 90 days you will receive a full refund of any fee paid. You will receive additional information before you are required to pay the fee for this product.