What is Guaranteed Asset Protection (GAP) insurance?

GAP is one of several optional add-on products – such as extended warranties or credit insurance – that a dealer will likely offer to you when purchasing or leasing a car. The cost of the product will be rolled into the loan amount. The products often have eligibility restrictions and based on a consumer’s individual circumstances, may not provide value,

The price of this product can vary greatly. Your own auto insurance company may offer a GAP policy, and some direct lenders also offer GAP policies. It is important to compare prices and coverage before you buy. If you choose to finance a GAP policy into your loan, it will add to your total loan amount, which ultimately increases what you’ll pay in total interest over time.

If you are told you must purchase GAP to qualify for financing, ask where the sales contract says that, or contact the lender yourself to find out if that is true. If it is true, the cost of the GAP insurance must be included in the finance charge and reflected in the disclosed annual percentage rate (APR). If it’s optional, you can decline it.

Also, you may be entitled to a refund if you sell, refinance, or prepay your auto loan. If you do not have your paperwork, check with your lender, the provider, or the dealer you bought the car from.

You have the right to cancel these optional add-on products at any time and reduce your costs.

If you have a complaint or a concern about this product, you can submit a complaint to the CFPB.

Know what is negotiable

Did you know that you can negotiate the terms of your auto loan? Negotiating can save you hundreds or even thousands of dollars over the life of your loan.

Find out more about auto loan negotiation

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