Guaranteed Asset Protection, also known as GAP will make sure your are prepared in the event of a total loss of your vehicle.
In the unfortunate event your vehicle is declared a total loss due to an unrecoverable theft or accidental damage, your auto insurance company will typically pay the current market value of your vehicle less your deductible. But what if your loan or lease balance is higher than the market value of your vehicle? Answer: You would be responsible for paying off the difference, including your deductible. This can be expensive.
The reason for the potential difference is that normally the loan/lease balance decreases at a predictable amount as monthly payments are made. However, the market value of your vehicle is influenced by several variable factors (e.g. supply, demand, mileage). This means that market value often may be lower than your outstanding balance - particularly early in your contract when you have the most to lose.
Guaranteed Asset Protection (GAP) can help pay the difference, including up to $1,000 of your insurance deductible (deductible may not be covered in some states. See the GAP agreement and contact a Finance Manager for specific details).