Let’s Talk GAP
Picture this. You’re on your way to dinner. You’re listening to your favorite song and life is good. The light turns green, and when you turn left, another vehicle slams into your car.
You’re OK, but the insurance company says your vehicle isn’t. It’s a total loss. That could be a problem because they will only pay you the value of the vehicle at the time of the accident, which could be less than what you still owe on your contract. Now you’re stuck paying for a car you don’t have anymore. Ouch!
What is GAP?
That’s where Guaranteed Asset Protection, or GAP, comes in. GAP is a little bit like having a spare tire. You have it there for peace of mind in case anything goes wrong on the road. GAP can help cover the difference between what you owe on your car, SUV or truck and what your insurance company will pay in the event your vehicle is totaled.1
Here’s another example: Let's say you refinanced your car on a $40,000 loan. But a year later, your car is totaled, and the insurance company determines its current cash value to be $35,000. If you have GAP, it could cover the $5,000 difference between the loan amount and the insurance payout, so you’re not left with a significant financial burden.
Why should I consider GAP?
Drivers should consider purchasing GAP protection for several reasons:
- Protection against depreciation Vehicles depreciate, especially in the first few years of ownership. If your car is stolen or totaled, your insurance company will typically only reimburse you for the current market value of the vehicle at the time of the loss. This amount may be significantly lower than what you owe on your loan. Guaranteed Asset Protection can help cover the difference.1
Long-term loan If you have a long-term loan, the likelihood of owing more on your vehicle than its current market value increases. GAP can be beneficial in these situations, as it can help bridge the gap between what you owe and what your insurance company pays out in the event your vehicle is deemed a total loss.
Peace of mind If something happens in the first or second year of your contract and you haven’t had time to pay down much of the principal, you may be at a higher risk of owing more on your loan than the vehicle's value.
So, where can you get this coverage? Look no further than car dealerships, lenders or auto insurance companies. It’s even available when you refinance through Mode℠, the online way to refinance your auto loan by GM Financial, so it’s financing you can trust.
Here’s what GAP through Mode covers:
- Provides coverage up to $50,000
- Covers up to $1,000 of your deductible
- Can cancel at any time2
If you’re currently not a GM Financial loan customer and refinance through Mode, you can opt to buy GAP protection while you’re applying for financing. Just know that you don’t need to purchase GAP to receive an offer of credit. Purchasing GAP, if your state allows it, enables you to include it in your monthly payment, so you never have to think about it. The extra protection is already in your budget. How smart of you!
The bottom line
You might be a safe driver, but accidents and theft can still happen. GAP can lessen your financial risk and can help turn a difficult situation into just an inconvenience. So, buckle up and drive with confidence, knowing that GAP has your back.
In addition to protecting your investment with GAP, you might also consider a vehicle service contract or VSC, coverage that repairs or replaces covered parts on top of your manufacturer’s warranty. And like GAP, you can opt to purchase a VSC plan during the Mode application process where applicable.
1May not cover the entire difference and subject to exclusions.
2May be prorated. See contract for details.
By Taylor Provost, GM Financial