Mind the GAP on Your Auto Loan

Ever known someone who totaled a car they were still financing? It happens more than you think. When it does, insurance may pay less than what’s left on the loan, leaving you stuck making payments on a car you don’t even have—and with nothing to put toward a down payment on a replacement.

Why GAP Coverage Matters

GAP stands for Guaranteed Asset Protection. It’s an optional layer of protection that helps cover the “gap” between what your auto insurance pays if your car is totaled or stolen and what you still owe on your auto loan or lease. Standard auto insurance typically only pays your vehicle’s current market value, which, thanks to depreciation, can be thousands of dollars less than your remaining balance. If your vehicle is a total loss and your insurance payout doesn’t cover your payoff amount, GAP can step in to help cover the difference.

As a car buyer, it’s an option worth a serious look. Ask yourself:

• Does my car tend to depreciate quickly (for example, many luxury vehicles)?
• How long is my auto loan term? The longer the term, the more likely your loan balance may outpace your car’s value, especially early on.
• How much did I put down? The smaller the down payment, the more likely you could end up owing more than the vehicle is worth.

If your answers point to higher risk, GAP coverage may offer valuable peace of mind.

Why Getting GAP Through a Credit Union Is Smart

GAP is one of several add-on products dealerships often present during financing. The irony? It’s one of the few extras that can truly be worth the cost—when it’s priced fairly. That’s where credit unions like OnPath come in.

Because credit unions are not-for-profit and member-owned, we focus on member value, not shareholder profits. That often means:

• More competitive pricing on GAP and other protection products than many dealerships or outside providers.
• Straightforward, transparent terms instead of high-pressure “add it to your payment” tactics.
• Guidance from staff who will help you decide whether GAP (or an extended warranty) actually fits your situation, instead of pushing every add-on available.

You get protection that matches your needs—and a clearer understanding of what you’re paying for.

And One More Thing

If you’re in the market to buy a vehicle, in most cases, it’s wiser not to rely on dealership financing to give you the best rates. You can get your auto loan directly through OnPath before you shop, then walk into the dealership with one of the most competitive rates on the market already in hand. We also work with more than 100 preferred dealers who know our process and can help you get in and out more quickly.

Already in the middle of an auto loan somewhere else? We may be able to save you money there, too. Explore our auto refinancing options to see if you can lower your rate, reduce your payment, or shorten your term—while adding the protections that make sense for you.