GAP coverage protects "upside down" car buyers.
After a home, a new car is the largest purchase many of us will ever make.
With such a big part of your financial worth riding on four wheels, a totaled or stolen vehicle may break not only your heart, it could break your budget, too.
As many drivers have learned only after it's too late, a standard auto insurance policy might not provide all the financial protection you need. If the value of your car is less than the balance of your auto loan, you're "upside down" on your loan, and there's a “gap” that isn't covered. That difference is what a special type of protection, called “GAP coverage,” is designed to cover.
To see how you could end up in an upside down situation, consider this scenario.
Your car has taken a trip downriver during a record-breaking flood, just one year after you drove it home from the lot:
- Amount you owe on your auto loan: $20,000
- Your car's book value at the time of loss: $15,000
- Your insurance deductible: $500
- Amount the insurance company pays you: $14,500
- The gap: $5,500
Gap protection is intended to cover the difference between the value of your car at the time it's totaled and your outstanding loan balance — which you are still responsible for paying, even if your car is sitting under 10 feet of water. For more information, speak to a lender today.
Certain exclusions and limitations apply.