Don’t worry, this is not a college course that comes with a difficult final exam! This is a quick blog to let you know why Guaranteed Asset Protection (GAP) is important to you and your financial security.
GAP will protect your credit and your wallet if your financed vehicle is either stolen or totaled. Most of the time insurance companies will pay the trade-in value of a vehicle when it’s time to pay an insurance claim. The problem is when you buy a car, you’re not paying the trade-in value. You have paid the retail price for a used vehicle or a discounted price from the sticker price for a new vehicle. These insurance payments are much less than you will be expecting to receive. I recently assisted a member whose car was totaled. After his insurance check was received, he was still obligated to pay the balance $4,775! His Guaranteed Asset Protection will pay off the remaining amount. He can get his replacement car without the burden of paying for a wrecked car. By the way, this is not a rare occurrence, it happens to many people. Some insurance companies state that they offer vehicle replacement policies. Be careful with those products. One ad’s fine print stated that this was only good for the first year of ownership. What about the next five years of your loan? You’ll be left high and dry!
Stick with credit union’s Guaranteed Asset Protection (GAP), it’s fairly priced and it may save your credit.