All of the paperwork and new information presented during the vehicle-buying process can be a bit daunting, so it’s no wonder many folks get confused. One subject you don’t want to be confused about is gap waiver, which can be a real lifesaver if something unpleasant should happen to your prized vehicle.
A recent survey of people who have applied for at least one auto loan found that many don’t know what it means to be “upside-down” or “underwater” on your loan (also called “negative equity”) and don’t know what a gap waiver is. GAP is an acronym for “guaranteed asset protection” — and it can get you out of a deep financial bind if your vehicle is stolen or totaled while you still owe payments on your car loan beyond the actual value of the car (a.k.a. “upside-down” or “underwater”).
If you purchase a car and it’s totaled or stolen, you still have to make good on the loan even though the value of the car is probably much less than when you bought it. A guaranteed asset protection waiver, also known as a debt cancellation agreement, is intended to alleviate the difference between what you owe on your auto finance agreement and what your insurance will pay you.
Isn’t it called gap insurance?
The terms gap “insurance” and gap “waiver” are often used interchangeably, which sounds confusing. The fact is, this gap product is best described as a waiver because it is offered by your creditor and is not actually insurance.
Who exactly needs a gap waiver?
Gap waivers are important for consumers who finance their vehicle. For many drivers, a standard auto insurance policy provides only enough protection to cover the actual cash value of a vehicle when it’s damaged or stolen — and that most likely won’t be the full amount you borrowed. You are still responsible for paying the amount remaining on the finance agreement. However, if you have a gap waiver, the lender can waive some or all of the remaining balance (according to the terms of the gap contract).
Where can I get a gap waiver?
You can purchase a gap waiver at your dealership at the time you buy the vehicle. If you want to feel confident knowing that you have coverage no matter what happens, a gap waiver is for you. Car accidents are difficult enough physically, but why risk suffering unnecessary financial difficulties when you could have a gap waiver relieve some of that pressure?
- Only available at time of vehicle purchase
- Can prevent you from owing money on a vehicle you no longer own
- Assists with an unexpected and significant expense
- Avoids cash outlay to cover your insurance deductible, up to $1000
Our VIP (Vehicle Investment Protection) program is like a GAP waiver with a substantial difference. A GAP waiver waives any balance owing if you suffer a total loss of your vehicle (up to $50,000) but our VIP program writes a cheque for the outstanding balance. This money must be used at the original selling dealer toward the purchase of another vehicle.