Guaranteed Asset Protection (GAP) is a debt cancellation contract between the borrower and the lender where in exchange for a fee, the remaining debt on a new
or used vehicle loan may be cancelled under specific circumstances. GAP covers the difference between an insurance settlement amount and the outstanding loan
balance if the vehicle is involved in a total loss claim. The total loss claim can be the result of an at-fault or not-at fault accident, or due to a theft
or flood.
When a new vehicle is purchased, the value depreciates significantly after purchase and such depreciation continues as a slow trend throughout the term of the
loan. With a used vehicle purchase, a trend of slow depreciation also continues throughout the loan term. Additionally, new or used vehicles can experience
periods of accelerated depreciation from various market forces and trends in play such as rising fuel prices and the current transitioning of the auto industry.
When financing a loan amount with a high loan to value which approximates the full purchase price of the vehicle, the potential for a "gap" is created.
If the vehicle securing this loan is subsequently totaled, the auto insurance provider’s settlement is based on the actual cash value of the vehicle,
not the outstanding loan balance which could be considerably higher. With GAP included on the loan at origination, this “gap” deficiency is covered.
Without GAP coverage, the loan payoff deficiency continues for the borrower as a financial obligation for a vehicle no longer of use.
The typical price for GAP through many sources is around $500. At SECU, for a one time fee of $135 your vehicle loan can be originated to include GAP protection.
Included is a 90 day “free look” period during which the coverage may be cancelled with a full refund applied to the outstanding loan balance. Depending upon the
amount financed on your next vehicle purchase, GAP coverage may be the right choice for you. Contact your local branch or the SECU Call Center at 1-888-732-8562
for assistance.
Auto, homeowners, other personal lines of insurance and term life insurance are available through your local branch. These products along with health insurance
and long term care insurance are available through SECU Insurance Services. SECU Insurance Specialists are licensed to sell insurance in North Carolina only. You
can contact SECU Insurance Services toll free at 1-888-856-2350 or locally in Raleigh at 919-857-2058 Monday – Friday from 8:30 am to 5:30 pm.
Other Related Links:
June 2009 - Loss of employment can result in loss of health insurance.
Temporary relief may be available.
May 2009 - Interested in term life insurance? See some of the factors that influence term life insurance premium rates!
March 2009 - An increasing number of insurance companies are
relying on insurance scoring models to streamline the evaluation of risk as part of the underwriting process.
February 2009 - Maintaining adequate insurance protection at all times is a
sound risk management practice. SECU stands ready to assist members in this endeavor.
January 2009 -
SECU deposit accounts are insured under the National Credit Union Administration (NCUA), a U.S. Government
agency that provides deposit account insurance through the National Credit Union Share Insurance Fund (NCUSIF).
December 2008 - The primary purpose of property and liability insurance
is to minimize exposure to catastrophic losses. A periodic review of insurance coverage limits is recommended to assure that adequate levels of protection for
accumulated assets are in place.
