No one wants to be paying off an auto loan for a vehicle if it has been totaled or stolen. In most circumstances, your vehicle is worth a lot less the second you drive it off the lot. If you're involved in an accident and your car is damaged beyond repair or your vehicle is stolen and never recovered, your insurance company will likely pay the current value of your vehicle, which could be much less than what you owe. This creates a negative equity situation or a loan "gap" on the money you owe. In other words, it leaves a balance on your auto loan and that will still have to be paid off in addition to the financing for your replacement vehicle (that you'll likely need to purchase). Purchasing GAP can protect the investment you made in your vehicle where your insurance falls short.
What is GAP?
Guaranteed Asset Protection, or GAP, is a voluntary, non-insurance program offered as protection on a new or used vehicle that is financed or leased. It is a supplemental benefit that enhances, rather than replaces, your standard comprehensive, collision, or liability coverage. GAP waives the difference between your primary insurance carrier's settlement and the payoff of your loan.1 In other words, it protects the "gap" between your vehicle's value and the amount you still owe in the case it is damaged beyond repair or stolen and never recovered.
How does GAP work?
Depending on where you live, the established market value of your vehicle could be less than the actual balance you owe. In the event of a total loss or theft, GAP waives the difference between your primary insurance carrier insurance settlement and the payoff of your loan or lease, less delinquent payments, late charges, refundable service warranty contracts and other insurance related charges.2
How can you purchase GAP?
GAP can be purchased at some financial institutions, like Members First Credit Union of Florida. The cost of getting GAP through your credit union is generally half the cost of purchasing GAP from dealerships — potentially saving you hundreds up front.
Members First Credit Union of Florida offers the following GAP Protection Benefits:
- Protection for the term of your loan up to 84 months
- Coverage for vehicles valued up to $100,000 at time of purchase
- Payment benefits up to $50,000
- Coverage for auto insurance deductibles up to $1,000
- Benefits for new or used vehicles, including cars, light trucks, motorcycles, boats, RVs, and some other motorized vehicles
- Bonus: Free Auto Deductible (ADR)
- Pays/Reimburses up to $500/per loss (unlimited losses per year) when a loss is filled and paid by the Auto Insurance Company for the Covered Auto.
For details or to add this important protection product to your loan or call us at (850) 434-2211 and select option 2 to speak with a representative in our Loan Department.
1 Less delinquent payments, late charges, refundable service warranty contracts and other insurance related charges. 2 Subject to other applicable exclusions and limitations.
Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, collateral age, and conditions. The APR will be disclosed prior to an advance being made on a loan.
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