How much did you pay for GAP insurance?

I’m sorry, but GAP does not cover negative equity rollover loans, meaning if you total your Altima and roll $10k of negative equity into a new loan, purchase GAP, then total that vehicle, they aren’t paying for that $10k. It will either be excluded or they won’t provide GAP. If it has happened, it either means an underwriter or insurance specialist screwed up and you got lucky. People would total their cars intentionally all day if that were the case.

 

And some states personal auto policy offers Loan NPO as an elected coverage, which is GAP. In the event of a total loss, the insurance company asks the lienholder whether or not there was any roll over into the loan. If there was, it’s not covered.

 

I didn't say GAP covered everything, it covered the negative equity of the Corolla. The settlement covered everything else. My apologies for the lack of clarification. He was happy that he was free and clear of all negative equity from GAP and the dentist settling out of court, and all it cost was a broken nose and two black eyes.

 

My bank just told me and then sent me my contract and they said it does cover my negative equity.

 

The main reason people do that is because it's fraud

 

Some people like to run their jibbyjabby’s like they know what they’re talking about

 

Hey btw all jokes aside, I think we've beat this horse to death a bit, so let's try to keep the conversation light. We are, after all, the nice 4Runner forum!

 

I can't imagine any somewhat decent adult intentionally crashing their car for gap insurance fraud. It wouldn't put any money in their pocket, and their insurance rates would increase. Only an absolute idiot would do it. Not that there aren't plenty of those around.

Nice!

 

Happens every day. Doesn’t necessarily put money back into their pockets, but it erases their debt.

 

You might want to clarify with them. GAP will cover the negative equity on the asset that you purchased it for, not a previous loan balance that you rolled over. One of the things that GAP excludes is any unpaid loan or lease balances. Either the person you spoke to didn’t understand the question, purposely lied, or didn’t know what they were talking about.

 

Correct. It is not uncommon for someone to report their car stolen, set it on fire, or stage a loss for this very reason. But if you guys want to roll with what you think you know, go for it.

 

I'm talking about normal, rational people. You make it sound like the majority of people would commit insurance fraud. I highly doubt this is true. I'm not saying it doesn't happen. I'm just saying that the vast majority of people would not commit a crime just to erase some debt.

 

I’m not saying it’s common. I’m saying it’s not uncommon. Insurance fraud accounts for about $30B per year.

 

Well that's just sad no matter how you look at it. As far as GAP insurance, I just hope I never need to use it.

 

What are your "qualifications", for lack of a better word, as they pertain to your knowledge of GAP? You are offering a lot of statements as fact without a CV to sort of back up your knowledge base.

As far as GAP covering negative equity I think we are on the same page... or maybe in the same book, at least. Your posts make sense but you also aren't considering the fact that the old loan is satisfied and goes away ---> If you trade in a car and have negative equity on it, that loan gets satisfied by the dealer you traded the car in to. The new loan then is for much more than it would be if you didn't have the negative equity in your trade, but it's still a new loan for one vehicle, and that vehicle is the collateral for the loan. You owe money on that vehicle alone, albeit a helluva lot more than MSRP. GAP is designed to cover this situation - and GAP absolutely covered it for me in exactly this situation.

I had a Civic that I bought and rolled about $3k of negative equity into. Poor decision, but that's neither here nor there. Due to natural depreciation anyway, the Civic lost about $2k in value, so now we're at about $5k over KBB value for the car that I still owed on it. A driver suffering a medical emergency came off the road and hit the Civic as it sat unoccupied in a parking lot. Her insurance fought the claim, under the guise that a "medical emergency" was somehow excepted from coverage. My insurance obviously fought them, but in the meantime stepped up and paid me the value of the totaled Civic, which was $5k under what was owed on it. GAP stepped up and covered... the gap. GAP actually even covered the deductible. I was even - steven as far as that loan, it was completely satisfied between my insurance and the GAP coverage. GAP actually was easier to deal with than my own insurance. I sent them a copy of the police report and that was it.

I can't imagine that if they do this for a living, and their interest is obviously in keeping their money, that they would "accidentally" pay out $5k. I also can't imaging that if another poster specifically checked with his insurer and pulled a copy of the coverage and it clarifies that GAP covers negative equity, that that insurer is a liar and that the paperwork is fraudulent.

MY Civic was totalled in... I want to say 2010? 2011? It's been a minute. I don't have any paperwork pertaining to the payout anymore, or I'd happily post it. I also can't recall who my GAP coverage was with but I feel like it was with American Honda Finance.

 

I’ve had the unfortunate honor of being an adjuster for 5 years, 1 of which I handled nothing but total losses. Rolling an existing loan into a new loan is different than a dealership paying off your loan, then giving you a new loan. You are simply paying more for the car at that point. If you, for example, trade in your Altima, but have $10k in negative equity, you are more than likely going to have to roll some or all of that balance into a new loan. Why? Because no lender is going to approve you for a $40k loan on a $30k vehicle. If you hypothetically never made a payment and they had to repo the car, they wouldn’t be able to get their money back out of it. Same reason an appraisal needs to be done when buying a house. Now, if you have $1k in negative equity, I imagine it’s a lot easier to get approved for a $31k loan on a vehicle worth around $30k, though it probably depends on credit score, money down, etc.

 

I suppose this would be different in cases like mine, where the new loan is through a different lender. The original loan is paid out, and a new loan begins.

I'm not even sure how you could roll a loan into another loan, because in order to trade in a vehicle, the title must be free of liens. Therefore, the loan must be paid off by the dealer taking the trade, or the vehicle owner.

Unless you're talking about a situation where someone had a dealership add an existing loan into a new loan in order to keep both cars??

 

You can have multiple lienholders, but only one of them has the title.
* read that as I was doing something else. I don’t know exactly how that works. In an event where you are upside down, but with no GAP, insurance will request a letter of guarantee for the ACV amount ($10k on a $20k loan). The lender usually signs it, agreeing to release the title to insurance for the $10k. The person is still on the hook for the rest.