ECU Credit Union
Connect With Us
Facebook Email LinkedIn
  • Home
  • Virtual C U
    • Online Banking
    • Virtual Branch Log On
  • Products & Services
    • Home Loans >
      • First Mortgage
      • Second Mortgage Loans
    • Lending Services >
      • Auto Loans
      • Recreational Vehicles Loans
      • Signature Unsecured Loans
    • Deposit Accounts >
      • Checking Account
      • Savings Account >
        • Youth Membership
        • Christmas Club Savings
        • Pet Care Club Account
      • Money Savers Account
      • Individual Retirement Account (IRA)
    • Rates >
      • First Mortgage Rates
      • Loan Rates
    • Fees
    • Apply Online
    • Deposit Rates
    • ATM and Branch Locator
    • Product & Services FAQs
  • Credit Card
    • Visa® Platinum Credit Card
    • Visa -Apply Online
    • Balance Transfer
    • ScoreCard® Reward
    • Visa Checkout
    • View Credit Card Statement
  • Membership
    • About
    • Join Now >
      • Disclosures
      • Testimonials
    • Member Forms
    • Financial Check Up
    • Membership FAQs
    • Youth Accounts
  • Contact Us
    • Locations
    • ATM & Shared Branch Locations
    • Employment
  • Coronavirus
  • Blog
  • Annual
  • Spring Sweepstakes

To GAP or not to GAP… that is the question.

10/11/2018

13 Comments

 
​Authored by Nancy Preising, 28 years with ECU Credit Union, and over 30 years in the financial industry.  
In my professional career, it’s important that I know the ins and outs about GAP Insurance.  However, I have found out the hard way that not everyone knows about GAP or if/when they should purchase it. GAP protection is insurance that covers the difference of what you “owe” on the car and what it is “worth” so that you do not go out of pocket in the event of a total loss.  And through the credit union, it only costs $400!  Most dealerships charge $795 or more!!  It’s a great deal and one of the many benefits of credit union membership. 

Recently, a good friend of mine bought a new car and within the first 6 months of ownership, the car was totaled.  When they bought the car they added on tire insurance, leather protection, and an extended warranty, but regrettably no GAP.  Sadly, when they received the settlement from the insurance company, it was $10,000 less than what they owed!  This is what I meant earlier by finding out the hard way. 

Now GAP isn’t for everyone.  If you are lucky enough to have an excellent trade and/or large down payment, GAP is most likely not something you would need.  However, if you are like most of us, you may find yourself in a scenario where it might be a good idea to purchase GAP on your next automobile loan.  

Financing all, or nearly all of the car purchase, will immediately put you upside down on the loan.  If you include the tax, license, and registration in your loan you will be borrowing more than the car is worth. Extras such as a warranty or an extended service plan will inflate the loan and you will very quickly owe more than the cars value.  This trend, coupled with the shift to longer loan terms of 72 or 84 months, and you will find that you won’t have equity in your car for a very long time.
​
GAP is a no-brainer!  The risk with any of these situations is that you will owe more on the loan than the car is worth.  If you were to encounter a total loss (by theft or accident) the insurance will only cover what the car is worth and not what you actually owe.
​
To GAP or not to GAP… now you know the answer!
13 Comments
Susan Langley
10/11/2018 11:50:12 pm

I think GAP is worth the money especially when you buy a new vehicle. The value declines much faster than the loan balance it takes about 3-4 years for the loan balance to catch up to the vehicle value but only if you put and average amount of miles per year on the vehicle.

Reply
Rebecca Arnett
10/12/2018 11:44:39 am

A few years ago my Mom was in an accident and her car was totaled. The problem, her vehicle was one of the Volkswagen Passat diesel cars. After she bought the vehicle, the news came out that VW had lied about their clean diesel and all the Passats immediately dropped in price about 10-15,000 dollars.

Because Mom didn't have GAP, she was given what the car was "worth" and ended up.having to pay off the rest of the note herself.

The next car definitely had GAP. She was hit from behind and her new car was totaled. This time, having GAP saved her.

She is now on vehicle 3, and she went with GAP again. Hopefully, we won't have to use it!

Lesson learned, when I bought my truck, I got GAP! The dealership will offer you GAP, but check that price. The Credit Union's cost was so much better!

Reply
Sandra Pomering
12/13/2018 11:09:05 am

Thank you for the information.

Reply
Felicia Miles
10/28/2018 04:25:01 pm

GAP Insurance can be very tricky. I understand that some have had the great experience of having GAP Insurance and obtaining positive outcomes; however, others have not been so lucky. I had a boyfriend that had GAP Insurance. Totaled his Mazda, and for years was contacted regarding his having GAP insurance. As I called to inform about the GAP Insurance he had.... it turned out that they contacted him to inform him that they would not be able to assist him with his car being totaled, and he actually ended up owing them money. It was found that there is a specific type of GAP Insurance that is beneficial to the owner, which is stated to be GAP Insurance with Totally Reimbursement. Any other form that does NOT specify Total Reimbursement, is stated to only cover the balance of what you(the owner) owe on the totaled vehicle. NOT the total price of the vehicle, which will enable you to obtain another vehicle.

Reply
Mary Hudzietz
11/1/2018 06:45:42 am

I co-signed on a new car loan and thought we had gotten GAP. Found out it wasn't purchased after the car was totaled. Wish I would have asked more questions.

Reply
Fanteline Roberson
4/20/2019 08:59:03 am

I’m in the same situation now

Reply
Elsie Ofoh
11/5/2018 10:52:28 am

I have no idea what GAP is I must admit

Reply
Nancy Preising
11/12/2018 09:21:23 am

GAP protection is an additional insurance that covers the difference of what you “owe” on your car and what it is “worth” so that you do not go out of pocket in the event of a total loss. Sometimes your insurance doesn't cover the full balance owed on your loan. Especially if an accident or other damage happens early in the loan term.

Reply
Jeaneki Lee
11/16/2018 11:42:11 am

I NEVER knew ANYTHING about GAP until this year purchasing 2 new vehicles. The finance agent did an exceptional job explaining it and thats what made proceed with it. HOWEVER, if had researched a little more I probably would have saved a ton of money going through the credit union. Glad I have it but leassoned learned to search for a cheaper rate.

Reply
Sandra Pomering
12/13/2018 11:13:00 am

Thank you. Good and helpfull information.

Reply
Nola
11/21/2018 10:47:51 am

Thanks for the information.

Reply
Frances
11/30/2018 04:38:11 pm

Helpful information, thank you!

Reply
Alice Garwood
12/28/2018 10:29:36 pm

Great information. Thanks so much!

Reply



Leave a Reply.

    Author

    This Blog is written by various ECU Credit Union associates.  With 30+ years in the financial industry helping our members achieve financial health.

    Categories

    All
    Beneficiary
    Club Accounts
    Credit Card
    Credit Union Difference
    Managing Debt
    Membership Management
    Mobile App
    Mobile Deposit
    New Year's Resolutions
    Protect Your Identity
    Scams
    Vacation Loans

Links

​Rates and Fees
Home
About ECU
Contact Us
Rates
Privacy Notice (This link will open a PDF document)
Privacy Policy (This link will open a PDF document)​

PRODUCTS & SERVICES​


​Online Banking
Mortgages
Auto Loans
Credit Cards
Retirement (IRA)

​ECU Credit Union P. O. Box 4818, Seminole, FL 33775-4818
​Lending Rates are quoted as Annual Percentage Rates (APR)
​Deposit Rates are quoted as Annual Percentage Yields (APY) - Fees May Reduce The Earnings on The Account.

Membership


​Become a Member
Membership Forms
Membership FAQ


​Phone:
727-471-1330

​LEGAL 


NCUA logo with link to the NCUA website
This credit union is federally insured by the National Credit Union Administration. ​​

Equal Housing Opportunity logo
​Fair Housing & Equal Credit Opportunity Act:
We Do Business in Accordance With the Federal Fair Housing Law and the Equal Credit Opportunity Act. 


 Website Accessibility Disclaimer
We are not liable for content or availability of linked sites.   Refer to our Third-Party Links Disclaimer for more information.
Unauthorized access or use of this website is not permitted and may constitute a crime punishable by law.