Canceling GAP insurance

[mclasser]

At the time of purchasing my car, I had the dealer add GAP insurance to the monthly payments. The amount left on the loan is now less than the car's fair market value, so GAP is no longer needed. I dug up the purchasing paperwork and the GAP policy is handled by a 3rd party insurer. I looked them up and it seems I have to contact the dealership to initiate the cancellation process.

To the folks who've gone through GAP cancellation - How easy was it for you?

 

[slacktide_bitog]

Isn't GAP insurance from a dealer typically a one-time payment? You're financing the GAP payments, but it would otherwise be a one-time payment. In fact, most auto lenders and banks won't finance GAP insurance for that reason. You will not get a refund.

GAP insurance purchased from an insurance company works different, as it is a periodic/recurring payment just like any other insurance poly, including your regular car insurance

 

[Lyman]

GAP insurance is a one time purchase. You already paid for it. You will not get a refund for canceling it. The added amount you pay the finance company is only covering the one time cost.

 

[Donald]

They saw you coming.

 

[buddylpal]

Actually you can cancel and get a refund for gap insurance. It is a backend product that can be cancelled. Dealers will make you fight for the refund, they are key in actually getting it refunded.

 

[buddylpal]

The gap company gets the refund request from the dealer and they typically send the refund to the dealer, and the dealer sends it to the lender typically and it goes towards the principal balance. Why are so many people making stuff up about this.

 

[JohnnyJohnson]

Originally Posted by Donald
They saw you coming.


Truer words were never spoken!

 

[Rand]

I learned awhile back if you want gap coverage.. get it from your insurance company.

 

[Andrew1972]

Originally Posted by Rand
I learned awhile back if you want gap coverage.. get it from your insurance company.


Or buy a car you can afford the depreciation loss.

 

[montero1]

You can get a refund but it is prorated.... in the future it ends up being cheaper to just get it through your insurance company.

 

[Hall]

Originally Posted by Rand
I learned awhile back if you want gap coverage.. get it from your insurance company.

Originally Posted by montero1
You can get a refund but it is prorated.... in the future it ends up being cheaper to just get it through your insurance company.

Plus you're not paying interest on the add'l amount rolled into the vehicle's loan. Adding a 3rd-party warranty and gap insurance, which just increases the amount you borrow, probably keeps the amount owed easily above the value, which is all the more reason some probably do need gap insurance. If you do want or need it, absolutely get it through your own insurance company and add it to your existing policy. It would probably be a few dollars a month extra ($3 x 12 months x 5 year loan = $180 TOTAL). Guarantee you no dealer is selling gap insurance for that low amount.

 

[Wolf359]

Originally Posted by hallstevenson
Plus you're not paying interest on the add'l amount rolled into the vehicle's loan. Adding a 3rd-party warranty and gap insurance, which just increases the amount you borrow, probably keeps the amount owed easily above the value, which is all the more reason some probably do need gap insurance. If you do want or need it, absolutely get it through your own insurance company and add it to your existing policy. It would probably be a few dollars a month extra ($3 x 12 months x 5 year loan = $180 TOTAL). Guarantee you no dealer is selling gap insurance for that low amount.


Plus you can drop it anytime you're no longer upside down so you probably wouldn't even have it for 5 years. And right, the way to avoid it is to either put some kind of down payment on it so you don't need it or self finance and don't total the car.

 

[Hall]

Originally Posted by Wolf359
And right, the way to avoid it is to either put some kind of down payment on it so you don't need it or self finance and don't total the car.

That's not really helpful - a LOT of people simply aren't able to do that (and I won't judge them either). My complaint is that many dealers take advantage of buyers and while they don't really sneak it in, many people are excited about a new (to them) car purchase and focus too much on the monthly payment. Gap insurance and 3rd-party warranties are huge profit-makers for dealers though so they won't stop doing it....

 

[ryster]

I paid my car off early, and received a notice from the auto loan finance company that I was entitled to a pro-rated refund of the GAP Insurance under the laws of my state. They also sent me a letter I was to forward to the dealer, and the dealer in turn is to forward to the GAP Insurance company. I also received a postcard from the GAP Insurance company confirming I have to contact the selling dealer myself and get them to do all of the work. That has been kind of a challenge considering the current closures due to the pandemic. However I emailed my sales rep all of the documentation over a month ago and have heard absolutely nothing. I doubt I will ever hear anything since my request requires them to do work and they get nothing out of it. I figure I am owed about $50. Once things reopen, I will contact them again and request my refund, however I am not going to knock myself out for $50 unless they really give me attitude. Then it might be kind of fun to make their lives miserable.

 

[buddylpal]

Depending on your selling dealer, getting the refund for gap insurance can be quite difficult. The basic structure for gap reimbursement is as follows: customer contacts dealer for gap refund, dealer contacts gap company for refund, gap company sends refund to dealer, dealer sends check to finance company if vehicle is still financed, or dealer sends the check to you directly if the vehicle is paid off. Some states might have a slightly different process.

This process can take months mainly because dealers are slow to help with this. They are essentially losing money so they basically don't care. A lot of times they simply don't even start the refund process even though they stated they did. A lot of times they also hold on to the refund check and claim they never received it. I used to work in auto finance for a many number of years, these were all common tactics used by dealerships.

FYI- for people who have total loss claims on financed vehicles and get upset about how long it takes to payoff your total loss vehicle. A lot of times dealerships literally sit on those backend product refund checks that can significantly slow the loan payoff process.

 

[Hall]

You should probably confirm that the salesperson even still works there. Some places have really high turnover with salespeople coming and going constantly. Don't presume that just because the email didn't bounce that the person still works there. They likely have emails forwarded to a "manager" so they don't miss any possible sales leads. Of course inquiries like yours probably end up in the "oh, we must not have rec'd your message" trash bin....

 

[ryster]

Originally Posted by hallstevenson
You should probably confirm that the salesperson even still works there. Some places have really high turnover with salespeople coming and going constantly. Don't presume that just because the email didn't bounce that the person still works there. They likely have emails forwarded to a "manager" so they don't miss any possible sales leads. Of course inquiries like yours probably end up in the "oh, we must not have rec'd your message" trash bin....


I received an email from him the other day saying "hey, we are open for service if you need anything!"...so I know he is still there. I think my inquiry is being ignored simply because it means work for them and cutting a check

 

[HowAboutThis]

Originally Posted by hallstevenson
Originally Posted by Wolf359
And right, the way to avoid it is to either put some kind of down payment on it so you don't need it or self finance and don't total the car.

That's not really helpful - a LOT of people simply aren't able to do that (and I won't judge them either). My complaint is that many dealers take advantage of buyers and while they don't really sneak it in, many people are excited about a new (to them) car purchase and focus too much on the monthly payment. Gap insurance and 3rd-party warranties are huge profit-makers for dealers though so they won't stop doing it....



"I can't afford to save $400/mth into a savings account for a $25k car but I can afford to pay $450/mth to a bank for a $25k car."

That's what I hear when people say they can't afford a car without a loan. There are a FEW exceptions when I'd lessen my judgment of someone for a car loan.

 

[Ben Boyle]

I had gap insurance on my Verano that I totaled last year. It was a small additional monthly fee. When it got totaled I received a pro-rated check. This was all through GM Financial and it happened automatically, I didn't have to do anything to get it.

 

[Wolf359]

Originally Posted by hallstevenson
Originally Posted by Wolf359
And right, the way to avoid it is to either put some kind of down payment on it so you don't need it or self finance and don't total the car.

That's not really helpful - a LOT of people simply aren't able to do that (and I won't judge them either). My complaint is that many dealers take advantage of buyers and while they don't really sneak it in, many people are excited about a new (to them) car purchase and focus too much on the monthly payment. Gap insurance and 3rd-party warranties are huge profit-makers for dealers though so they won't stop doing it....


Sorry, it's not like the dealer put a gun to the buyers head and told them to sign here. Buyer can always decline and drive carefully so that it isn't totaled. They are essentially paying less than the depreciation that is happening during the beginning of the lease. Gap insurance is just another higher interest rate paid by people who don't have the money. The less money you have, the more it costs you. I drove my old beater after college for three years even after I got a real job and could have easily afforded a new car. At the time lots of other people at the job thought it was a smart thing to do and a few of them had cars with over 200k on it at the time.