GAP Insurance = A Peace of Mind Car Loan

Published on October 8th, 2020

GAP Insurance can save you money! But what is GAP? GAP stands for Guaranteed Asset Protection. If your car gets stolen or damaged and is deemed a total loss, you are still responsible to pay the difference between what you owe and what your insurance company says your car is worth.

The moment you drive your car off of the dealer’s lot, it depreciates about 20% on average. Furthermore, you can count on an approximate 15% decline in value each year for the next four years.

What happens if your car gets totaled? GAP Insurance will cover the difference and possibly save you thousands of dollars. Here is an example:

  • Loan Payoff: $20,000
  • Car Value Determined By Primary Insurance: -$16,000
  • Primary Insurance Deductible: +$500
  • Your Responsibility Without GAP: $4,500

In this example, if you did not have GAP Insurance, you still have to pay the remaining $4,500 on your loan. If you would have had GAP Insurance, you would owe nothing! GAP would cover the amount that is still owed on your loan!

Getting GAP coverage with your car loan at LCU is very reasonable at only $349. Please be aware that we have seen car dealers charge anywhere from $599 – $799.

As always, LCU wants to look out for your best interest. If you are getting your loan financed through the dealer, make sure to ask how much GAP costs. We have also heard stories about some car dealers automatically adding the GAP Insurance and unless that salesperson at the dealer is going over the loan with you line by line, you may not know that another $699 has been added to the cost of your loan.

Keep in mind, that if the dealer is offering the same rate as LCU, they may be charging you $450 more for GAP Insurance. Please find out what you are getting charged for GAP and if the finance rate is the same, you will be saving the $450 plus the additional interest by financing at LCU.

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