What is Guaranteed Auto Protection?
How Could My Insurance Fall Short?
What does GAP cover?
What If I Have A Total Loss?
Why Does The Waiver Cover 3 Years If My Loan Is For 5 Years (or more)?
Who Guarantees Payment?

What is Guaranteed Auto Protection?
Guaranteed Auto Protection or GAP, is a Waiver Of Deficit Balance, offering protection against financial liability for individuals who finance a new or used vehicle. GAP protects against financial loss in the event that your vehicle is totaled (damaged beyond repair) or stolen, and the insurance falls short, resulting in a "Deficit Balance."

How Could My Insurance Fall Short?
A "Deficit Balance" is a common occurrence in today's automobile market, especially during the first few years of your loan. During those early years, depreciation can cause the value of your vehicle to fall below the outstanding loan balance, especially if you financed the limit with little or no down payment. In that event, it is not uncommon, after a total loss, to find yourself still owing a deficit balance of thousands of dollars to the lender, even after the insurance settlement!

EXAMPLE: Based on a sale price of $18000, after one year, the value of your auto could be as low as $10,000, while the amount you still owed would be approximately $15,000. That leaves a gap that that you are responsible for.

What does GAP cover?
GAP covers the difference between the market value of your vehicle and the loan balance, less delinquent payments, late charges, refundable service warranty contracts, and other insurance related charges.

Without GAP, you would still be required to pay this $3000 out of your pocket, in order to pay off your loan. If you didn't (or couldn't) your loan would be in default, and the lender would report the loan as a charge-off to the credit bureaus and, in most cases, take you to court to recover the deficit.

What If I Have A Total Loss?
In the event that your vehicle is stolen or damaged beyond repair, you would file an insurance claim with your primary insurance carrier, as usual. If the insurance settlement is less than the total outstanding balance of your loan, you submit a claim to Virtual GAP to have the Deficit Balance waived, in accordance with the terms of your GAP Waiver Addendum. Full instructions are included in your contract and on the Virtual GAP website.

Why Does The Waiver Cover 3 Years If My Loan Is For 5 Years (or more)?
As you can see in the diagram above, the deficit is strongest in the early years of your loan. After three years, you have usually have paid down enough so that a total loss will not result in a deficit. However, a total loss before the first three years are paid can result in a serious deficit balance which you may not be in a position to handle. This program reduces costs by allowing you to only pay for the coverage you are getting.

Who Guarantees Payment?
The Virtual Gap Program is insured by Lloyd's Of London and administered by Virtual Lending Source, LLC, headquartered in San Diego, CA. Lloyd's Of London is over three hundred years old and is the second largest insurer in the world, operating in 120 countries. Lloyd's insures the top 10 pharmaceutical companies in the world, the top seven airlines, the top 10 banks and 93% of the companies whose stocks comprise the Dow Jones Average.