A recent real-life GAP claim from one of our credit union clients.
Mileage: Wicked High (a Maine pick-up truck!)
Financed Amount: $18,300
NADA value: $16,075
The truck was totaled just 2 months after it was financed.
The Bad News
The members auto insurance company assessed the value of the vehicle at only $8,700 just 2 months after the NADA was assessed at $16,075. This resulted in a $9,700 deficiency balance from the amount still owed on the loan.
The Good News
The credit union loan officer convinced the truck owner to place a GAP waiver on this loan agreement and the $9,700 was paid. Plus an extra $1,000 was applied towards this member’s next financed vehicle with that same credit union.
Because insurance companies frequently pay settlements that are far less than NADA valuations, the value of the vehicle financed may be much less than what is assumed – particularly without full inspection. This can especially be the case on older and high mileage vehicles. Know the risks and explain the benefits of GAP on every loan. Your credit union and members will be glad you did.