Guaranteed Asset Protection | Rocky Mountain Credit Union
Loans > Vehicle > Guaranteed Asset Protection

If you have car insurance without GAP, a wrecked vehicle could wreck your finances.


You don’t expect your car to be totaled by an accident or stolen---but you get car insurance just in case. You probably

don’t expect that your insurance settlement could suddenly leave you thousands of dollars in debt, because you owe more

on your car loan than your car is worth. You’ll be glad to know there is a way to make sure a car wreck doesn’t wreck your

finances: GAP, or Guaranteed Asset Protection for your vehicle loans.


If your vehicle is totaled, you could end up owing more on your loan than your vehicle is worth. This is known as being

“upside down” on your loan. As vehicles become more expensive and people take out more loans for longer periods of

time, their risk of being “upside down” has increased. Americans have signed up for a record amount of vehicle loan debt

for a record length of time. Almost one out of every four car buyers took out a 6 to 7 year loan---which has extended their

risk of being upside down to around five and half years.1


The reason for this problem is that most car insurance companies will reimburse you only for “fair market value.” Fair

market value is the common resale value for a specific car (based on make, model, age, mileage, condition, demand, etc.)

in a specific market. In some ways, fair market value doesn’t seem fair if your car is totaled, because you could end up

owing more on your loan than the insurance company says your vehicle is worth.


The greatest gap between your loan value and the fair market value usually occurs in the first years of your loan. The

second you drive your new car off the lot, it drops in value and keeps dropping. Value often drops 78% in one year, and

46% in 5 years.2 But your loan value doesn’t decrease as fast, creating a gap. It may no longer be enough to protect your

car, you may want to consider optional loan protection as well.


Fortunately, you can now fill this gap and protect your loan and your finances with GAP. GAP is like an airbag for your

vehicle loan. It can help fill the gap between what your vehicle insurance will pay and what you owe on your loan, to

cushion you against sudden out-of-pocket expenses if your vehicle is totaled.


As a credit union member, you can sign up for GAP anytime. The best time is when you’re

signing your loan paperwork. You can include it with your monthly payments or pay separately by cash, check, charge, or

electronic transfer.




1 Experian Study, 1st quarter 2014, from Daily Finance Financial Literacy, “Auto Buyers Set New Records, Load Up On Longer Loans.”

2 % for a typical vehicle in America. Edmunds, “How long should my vehicle loan be?”

Your purchase of MEMBER’S CHOICE(TM) Guaranteed Asset Protection (GAP) is optional and will not affect your

application for credit or the terms of any credit agreement required to obtain a loan. Certain eligibility requirements,

conditions, and exclusions may apply. Please contact your loan representative, or refer to the GAP Waiver Agreement for

a full explanation of the terms of GAP. If you choose GAP, adding the product fee to your loan amount will increase the

cost of GAP. You may cancel the protection at any time. If you cancel protection within 90 days you will receive a full

refund of any fee paid. You will receive additional information before you are required to pay the fee for this product.

State chartered credit unions in FL, GA, IA, RI, UT, VT, WI may choose GAP with or without a refund provision. Prices

of the refundable and non-refundable products are likely to differ. If you choose a refundable product, you may cancel at

any time during the loan and receive a refund of the unearned fee calculated by the actuarial method.

State chartered credit unions in CO and SC may cancel at any time during the loan and receive a refund of the

unearned fee calculated by the actuarial method.