Guaranteed Asset Protection

Guaranteed Asset Protection (GAP), also known as GAP Waiver Protection, is a debt waiver solution designed for lenders, banks, and credit unions to reduce risk in auto lending portfolios. It covers the difference between a vehicle’s actual cash value and the remaining loan balance in the event of a total loss or theft. By addressing negative equity, GAP helps minimize charge-offs while supporting stronger loan performance. 

Guaranteed Asset Protection (GAP) is a debt waiver product that covers the difference between a vehicle’s actual cash value and the outstanding loan balance if the vehicle is totaled or stolen. It reduces negative equity risk for lenders and helps protect borrowers from out-of-pocket expenses after insurance settlements. 

What is Guaranteed Asset Protection (GAP)?

Guaranteed Asset Protection (GAP), also referred to as GAP Waiver Protection, is a lender-offered debt waiver that covers the difference between a vehicle’s actual cash value and the remaining loan balance following a total loss or unrecovered theft. Because vehicles typically depreciate faster than loans amortize, borrowers may owe more than the vehicle is worth, creating negative equity.

Offered at the time of financing, GAP helps ensure that any balance not covered by primary insurance is addressed, reducing the financial burden on borrowers. For lenders, banks, and credit unions, GAP serves as a risk management tool that helps limit loss severity, reduce delinquencies and charge-offs, and support more consistent portfolio performance across auto loan programs.

  • Features

  • Benefits

  • Coverages

  • Option to include 2 Late Payments and 2 Skip-A-Payments.

  • $1,000 Benefit towards another vehicle after a total loss, if financed with the same lender. 
  • User-friendly online system to receive NADA values, purchase coverage and run quotes. 
  • Existing debt can be rolled into the loan when getting GAP Waiver Protection.

 
 
  • Helps reduce the risk of negative equity for the borrower.

  • The program provides a positive, quick, and fair claims experience.
  • Reduces charge-offs and GAP exposure allowing more loans to be made.
  • Ensures quick payment for GAP claims within 7-10 days.
  • Prevents negative interaction with borrowers due to deficiency loan balances.
  • Promotes customer retention by providing $1,000 toward a replacement vehicle.
  • Generates fee revenue by allowing markup from the lender.
 
 
  • Pays the difference between the ACV and loan payoff if the vehicle is stolen or totaled.

  • $1,000 Benefit towards a replacement vehicle if financed through the same lender.
 
 
 
 
 
 
 
 
 
 
 

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Guaranteed Asset Protection FAQ's

 
 
 
 
 
 
 
 
 
 
 

How does GAP insurance work?

If a vehicle is declared a total loss, standard auto insurance pays the current market value. GAP waiver protection then pays the remaining balance owed on the loan, eliminating the “gap” between the insurance payout and the loan payoff amount. 

What does Guaranteed Asset Protection (GAP) cover?

GAP typically covers the difference between the vehicle’s actual cash value and the outstanding loan balance after a total loss or theft. Some programs may also cover deductibles or provide additional benefits depending on the policy. 

Why do lenders offer GAP protection?

Lenders offer GAP to reduce financial risk, prevent loan deficiencies after total loss events, and improve portfolio performance. It also enhances borrower protection and can generate additional fee income. 

Does GAP cover deductibles or additional costs?

Some GAP programs include coverage for insurance deductibles or offer additional benefits, such as funds toward a replacement vehicle, depending on the provider and policy structure. 

What are the benefits of GAP for borrowers?

GAP helps borrowers avoid out-of-pocket expenses if their vehicle is totaled or stolen and the loan balance exceeds its value. It provides borrowers with financial peace of mind and can prevent negative equity situations. 

Additional Collateral Protection Insurance Solutions for Lenders

Risk management solutions to protect loan portfolios, reduce coverage gaps, and simplify insurance tracking. 

 
 
 
 
 
 
 
 
 
 
 
 

Vendor's Single Interest

 
 
 
 
 
 
 
 
 

A Blanket VSI policy eliminates the need to track insurance policies, send warning letters and force-place CPI coverage after loan closing. 

  • Check Mark Collateral Protection Insurance Alternative
  • 2 Check Mark Website Eliminates Insurance Tracking Post-Close
  • 2 Check Mark Website Provides Physical Damage Coverage
  • 2 Check Mark Website Additional Coverages Available
  • 2 Check Mark Website Simple Reporting & Remittance
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Auto Insurance Tracking

 
 
 
 
 
 
 
 
 
 

Outsource all the duties associated with opening insurance renewal mail, tracking insurance policies, sending warning letters and force-placing coverage.

  • 2 Check Mark Website Third-Party Insurance Tracking
  • 2 Check Mark Website Notifications Handled By Third-Party
  • 2 Check Mark Website CPI Coverage Placed When Needed
  • 2 Check Mark Website Transfers Risk of Non-Compliance
  • 2 Check Mark Website Access to Real-Time Online System
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Collateral Protection Insurance

Gain access to a user-friendly system which generates compliant warning letters and allows lenders to easily add, cancel and edit CPI coverage when necessary.

  • 2 Check Mark Website Add, Edit or Cancel Coverage Online
  • 2 Check Mark Website Automated Warning Letter Cycle
  • 2 Check Mark Website Physical Damage Coverage Included
  • 2 Check Mark Website Additional Coverage Available
  • 2 Check Mark Website Simplified Monthly or Annual Billing
LEARN MORE

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