Mind the GAP

Illustration by J.R. Arebalo

Mind the GAP

Why GAP is a good idea when you buy a new car

In a world where a vehicle’s value drops by approximately 20% during the first 12 months of ownership*, protecting yourself with Guaranteed Asset Protection or “GAP” may be a smart purchase as you prepare to drive off the car lot.

Many assume that our auto insurance will cover damages if a vehicle is stolen or wrecked, but this isn’t always the case. GAP provides an additional level of protection available for those who want it.

American Airlines Federal Credit Union

To learn more about GAP and additional ancillary auto products offered to members — usually at a much better price than dealerships.

Visit the Credit Union's website

GAP picks up where an auto insurance policy leaves off and is especially useful when your outstanding auto loan balance exceeds the vehicle’s total depreciated value. The math is simple:

You buy a new car for $30,000.
After putting money down, you owe $25,000.
Your car is totaled and your collision coverage payout equals the car’s depreciated value*.
If that value is $23,000, you would have to come up with the remaining $2,000 to satisfy your auto loan.

Discover more details here

In the same scenario, GAP – which is available from the Credit Union for a one-time fee of $375 and can be rolled into your loan – will cover the additional amount owed.

Credit Union member Dominick S. was glad he had signed up for GAP. Dominick totaled his more than $28,000 car just one month after opening his loan. The insurance company only paid around $22,800, leaving Dominick on the hook for more than $5,000. Because he had purchased GAP when he took out the loan for his car, the remaining debt on the loan was canceled.

Be sure to ask about the qualifications and options when you finance your next vehicle at American Airlines Federal Credit Union.

– Bridget McCrea

*"Car's depreciated value: How Much It Costs You," CARFAX

Your purchase of MEMBER’S CHOICE™ Guaranteed Asset Protection (GAP) is optional and will not affect your application for credit or the terms of any credit agreement you have with us. Certain eligibility requirements, conditions, and exclusions may apply. You will receive the contract before you are required to pay for GAP. You should carefully read the contract for a full explanation of the terms. If you choose GAP, adding the GAP fee to your loan amount will increase the cost of GAP. You may cancel GAP at any time. If you cancel GAP within 90 days you will receive a full refund of any fee paid.
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