In the unfortunate event your vehicle is declared a total loss due to an unrecoverable theft or accidental damage, your auto insurance company will typically pay the current market value of your vehicle less your deductible. But what if your loan lease balance is higher than the market value of your vehicle? Answer: You would be responsible for paying off the difference, including your deductible. This can be expensive.
The reason for the potential difference is that normally the loan/lease balance decreases at a predictable amount as monthly payments are made; however, the market value of your vehicle is influenced by several variable factors (e.g. supply & demand, mileage). This means that market value often may be lower than your outstanding balance-particularly early in your contract when you have the most to lose.
Guaranteed Asset Protection (GAP) can help pay the difference, including up to $1,000 of your insurance deductible.*
Are you prepared to pay the difference?
Is the amount you receive from your insurance company enough to pay off your loan or lease balance if your vehicle is declared a total loss?
|Market Value of Vehicle||$13,000|
|Less Your Insurance Deductible||$1,000|
|Proceeds from Insurance Company||$12,000|
|Amount You Owe on Loan or Lease||$18,500|
In this example, the answer is NO! The difference illustrates what you would still owe your lender without GAP.