In years gone by, lenders required a down
payment of up to 20% on automobile loans. The down payment offset the
taxes and license fees as well as the initial jolt of depreciation and helped
keep the loan balance in line with the vehicle value. With a substantial
down payment there was simply no "gap".
Although
a few loans are still made with a 10% or 20% down, the great majority today are
"no down" loans. Consequently, the majority of loans now starts
off with a "gap" and still has a "gap" halfway through the
loan term. It has been estimated that the average "gap" at the
start of a new car loan is now about $4,000, and the average is steadily going
up as car prices rise.
Consider the
following illustration:
Loan or lease payoff
$20,000
Actual Cash Value
-16,000
GAP
$ 4,000
Insurance Deductible
+ 500
Consumer's Financial
Responsibility
$
4,500
HOW GAPROTECTION WORKS
In the event a borrower's car is stolen or
damaged beyond repair, GAProtection will pay the difference between
the actual cash value the insurance company pays your borrower and the current
eligible balance on the loan. GAProtection can eliminate the
"GAP'!
COVERAGES &
FEATURES
Loan or Lease Limits
Autos, Trucks: Unlimited
Motorcycles: Up
to $50,000
RV's: Up
to $100,000
Watercraft: Up
to $100,000
GAP coverage Up
to $50,000 ($25,000 on Motorcycles, RV's and Watercraft)
Up to 150%
of Manufacturer's Suggested Retail Price including add-ons, or 150%
of NADA retail for used vehicles
Terms up to 84
months (and greater on RV's and Watercraft)
Coverage for all non-commercial
described collateral
Pays the difference between Actual
Cash Value and Net Balance of Loan or Lease
$1,000
Deductible "Buyback"
60 days of delinquent payment
coverage
Accommodates "balloon"
loans (provided regular payments are established toward a final payment
which is consistent with the residual value established in the Automobile
Lease Guide)
