Automobile insurance, required by law, is great for most situations. But did you know that it might not cover your entire loan in the event your car is totaled or stolen?
Guaranteed Auto Protection (GAP) is a program Premier Credit Union offers for your auto or RV loan. In the event of a total loss, most insurance policies agree to pay the actual cash value of a vehicle, which could be considerably less than the balance of your loan. You could be left with the balance to be paid out of pocket. This could limit your ability to replace your vehicle. GAP pays the difference in the balance on your loan and your vehicle's declared value if your vehicle is damaged beyond repair or stolen and never recovered.
The following is a example of how the GAP advantage comes through for you.
Vehicle's original purchase price is $25,000
Loan balance after two years is $21,000
Vehicle current value after two years is $16,000
Your vehicle is damaged beyond repair and your insurance company's settlement is the vehicle's current value $16,000
Your lost investment without GAP is your remaining unpaid loan balance (the "gap") of $5,000
If you have GAP insurance
GAP pays the $5,000 difference between your loan and your insurance settlement
GAP also pays $1,000 toward a new vehicle financed through Premier Credit Union
Your total GAP Advantage Benefit is $6,000
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