Your purchase of MEMBER’S CHOICETM Guaranteed Asset Protection (GAP) is optional and will not affect your application for credit or the terms of any credit agreement required to obtain a loan. Certain eligibility requirements, conditions, and exclusions may apply. Please contact your loan representative, or refer to the Member Agreement for a full explanation of the terms of GAP. If you choose GAP, adding the product fee to your loan amount will increase the cost of GAP. You may cancel the protection at any time. If you cancel protection within 90 days you will receive a full refund of any fee paid. You will receive additional information before you are required to pay the fee for this product.
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Vehicle Loan Guaranteed Asset Protection (GAP)
If your vehicle is totaled or stolen, do you know what will happen to your loan payments?
That new vehicle may be your pride and joy but here’s a reality check. Unless you’ve bought an exceptionally in-demand model, a new vehicle typically depreciates about 22% in its first year; and at five years, a car has lost about 55 percent of its new-car value. 1 Unfortunately, that doesn’t change the balance on your vehicle loan. For the time being, you have what’s called negative equity. You owe more than what the vehicle’s worth.
You can deflect some of this risk by adding GAP to your vehicle loan. If your vehicle is stolen or totaled, GAP will help cancel the difference between the primary insurance settlement and what you may still owe. That could be a big relief if you need to come up with a down payment and replace a stolen or totaled vehicle immediately. With the rising cost of vehicles, fast depreciation and longer vehicle loan terms GAP may be a smart option to add helping to cover the negative equity gap.
- 1 Edmunds, “How Long Should My Car Loan Be?”, May 2013
- 2 TIME, Business & Money, “Driver Consensus: It’s Silly to Upgrade Cars Every Couple of Years”, July 2012