Let me start off by asking two questions:
Did you have gap insurance when you copped your car?
Did you pay your car off early?
You answered yes to these two questions? You’re owed some money. Guaranteed Auto Protection (GAP) insurance covers the difference between the amount you owe on the loan and the actual value of the car. For example, if you owe $50,000 on your new car but it is totaled out at $45,000, you get a stuck with a $5,000 bill. If you purchase GAP insurance, it will cover the other $5,000.
I learned a trick (that’s completely legal) that can help you get a couple hundred dollars back. If you got gap insurance when you purchased your car, from the dealer or the bank, you’re paying for this upfront for the life of the contract.
Let’s say that your gap insurance was $1000 over a period of five years (this comes out to about $16.67 per month) and you paid your car off two years early (34 months remaining), you’re actually entitled to the unused portion ($566.78) when you pay the car off early. Check out the steps below:
- Once you pay your car off, contact the dealer/bank (whoever holds your loan) to request a payoff notice that says that the car is paid off in full with the date that it was completed.
- Take this letter to your dealership and tell them that you would like to cancel the remainder of your gap insurance policy and receive the unused portion of your gap insurance premium. It’s an interesting conversation to have at the dealership because when I did it, the accountant said most people don’t even know about it and asked how I knew about it. Don’t ask me questions, just run me my money, b.
- Sign that paperwork and get your check.
- I purchased my gap insurance through the dealer so I was able to handle everything at one time. You might have done it through your bank or credit union which may have you do some additional steps. You need to contact whoever is your GAP insurance provider to obtain the necessary forms. When I went to my dealer, I just gave them the payoff notice and signed a cancellation paper and I was done.
- Your GAP insurance provider may not tell you that you’re owed monies, but that’s why I’m sharing my knowledge with you all here. Wise up and get what’s owed to you.
- I don’t know the statue of limitations on this as I did it as soon as I paid off my own car. I’ve heard of people doing it within a year after they paid off their car off. If anything, give your gap insurance provider a call and see what’s up.