What is GAP insurance?
Guaranteed Asset Protection (GAP) insurance is an optional insurance coverage for vehicles that helps pay the difference between your loan balance and your vehicle's actual cash value if it's stolen or declared a total loss. Most dealerships and lenders offer GAP insurance when you purchase or finance a vehicle. This coverage protects you from financial loss by covering the remaining loan amount that your standard insurance doesn't.
GAP coverage varies depending on your policy and where you finance your vehicle. For example, At Abound, we offer GAP Plus as part of our GAP coverage. GAP Plus provides an additional $1,000 toward your next vehicle purchase if you finance through Abound within 120 days, helping make your next vehicle more affordable. GAP Plus can only be used after your vehicle is stolen or declared a total loss.
When is GAP insurance most helpful?
GAP insurance is especially recommended if you are:
- Financing your vehicle for more than 60 months - New cars typically lose 10% to 20% of their value in the first year, so your loan balance can quickly exceed the car's value. GAP helps cover this depreciation gap.
- Making a low down payment - When you finance a car, your loan includes the purchase price, taxes and other fees. This total amount is typically higher than the resale value of the car once it leaves the lot. GAP covers the difference between the high loan balance compared to the vehicle's lower value.
- Carrying negative equity from a previous loan - If you owe more on your current vehicle than it's worth, GAP insurance helps cover the difference if your car is stolen or totaled.
GAP insurance is a valuable add-on because it reduces your out-of-pocket expenses and provides peace of mind in the event of a total loss or theft. With Abound's Auto Loans - offering low rates and flexible terms - adding GAP coverage means you save money and stay protected.
Interested in learning more about our Auto Loans and GAP coverage? Visit your nearest branch today!
