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If you owe $12,000 on the loan, for example, and the lender sells your repossessed car for $8,000, the $4,000 difference — as well as any associated fees and costs — are called the deficiency ...
However, gap insurance makes sense when your auto loan balance is likely to exceed the actual value of the car. This usually happens when: You put little or no money down when you financed your car.
The effects of the coronavirus pandemic have been especially burdensome on auto loans borrowers. Unlike student loans and mortgages, there are no government-backed relief programs to cover a ...
Guaranteed asset protection insurance (or GAP Insurance) is an insurance coverage offered as a supplement to automobile insurance policies or auto loans. A GAP policy covers the difference between the value of a car (i.e., what the insurance company will typically pay), and what the borrower owes on the loan if the car is totaled or stolen.
GAP insurance is typically offered by a finance company at time of purchase. Most auto insurance companies offer this coverage to consumers. GAP insurance is often paid upfront and the purchaser is usually entitled to a refund of the unused portion of the premium if the vehicle is sold or refinanced before the end of the loan term. [4] There ...
Gap insurance is optional car insurance endorsement that covers the “gap” between the amount owed on a vehicle and its actual cash value (ACV) in the event it is totaled, stolen or rendered a ...
On the other hand, say you purchased gap coverage. The car insurance company may help pay the $6,000 difference to fulfill your outstanding loan obligation. ... To cancel gap insurance, you would ...
The most common forms of default resulting in repossession are failing to make required payments and failing to maintain adequate insurance coverage. Many U.S. states have enacted additional laws that apply specifically to the repossession of purchased and leased automobiles, and which are intended to afford additional consumer protections. [3]