Posted by ACCU Staff ● 2/16/21 10:00 AM

What is GAP?

Buying a new car is an exciting time! You found the perfect car – sunroof, leather seats, navigation system – the works. You couldn’t be happier. Then…you sit down with the finance person at the dealership. And all that excitement that filled you suddenly starts fleeing from your body.


Loan terms and jargon start getting tossed around, and before you know it, you’re completely lost and unsure what you’re agreeing to.

That’s Why We’re Here

Our goal is to help make your car-buying experience as fun and exciting as possible. And one way we can help is by explaining upfront, the car-buying process. Right now, let’s focus on a common protection plan called GAP.

What is GAP?

GAP or Guaranteed Asset Protection is an important and beneficial tool. It’s an extra layer of protection in addition to your normal auto insurance.

If your vehicle is totaled beyond repair, your insurance company will pay you the current value of your lost vehicle. But what if you owe more than the current value of your vehicle (which is common since new vehicles depreciate quickly)? You guessed right - you are stuck with the balance owed on the vehicle.

The following example will help illustrate the benefits of GAP.

                LOAN AMOUNT ::             $30,000

                CURRENT VALUE ::           $26,000

                OWED BALANCE ::            $4,000

  1. Assume you owe $30,000 on your current vehicle.
  2. If it is totaled beyond repair, your insurance company pays you the Current Value of your vehicle – in this example, $26,000.
  3. However, you still owe $4,000 to your lender. This ‘gap’ (or $4,000 balance) is your responsibility.

If you have GAP (Guaranteed Asset Protection), the $4,000 in this example would be covered.

How to Get GAP?

Almost all dealerships offer GAP. In fact, it’s usually one of the first things the dealership finance employee will ask you about. However, at the credit union, we offer GAP as well. And our GAP is usually up to 50% LESS than dealership prices.

When you apply for your new or pre-owned vehicle with us, our Loan Officers will review GAP and other options available – all designed to save you money and eliminate confusion before you ever visit a dealership. As a not-for-profit financial institution, our purpose is to help you make better financial decisions; not generate extra income like dealerships.


We’re Here to Help!

If you have any questions about GAP or would like to speak with a Loan Officer about being pre-approved for an auto loan, stop by our branch or give us a call at 800-343-6328.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.

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