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Established Contributor
valley_man0505
Posts: 879
Registered: ‎05-29-2008
0

Gap insurance refund after refinancing???

Two years ago, I bought a truck from a local dealership.  The vehicle was financed through Wachovia (later became Wells Fargo), and this financing was set up by the dealership.  Last month, I refinanced this loan through a local credit union.

 

Last week, I received a check from the dealership for just over $500 for "Gap refund".  I did have Gap insurance included in the original financing, but I really am not clear on how this works.  On my original purchase papers, it shows $799 included in the loan for Gap insurance.   The refund I received works out to be prorated (i.e. I had the loan for just under 2 years out of the 5 year loan, so there was just over 3 years left; 3/5*800=480). 

 

I am confused by this.  First, why is this coming from the dealership itself and not from the Wachovia/Wells Fargo?  Secondly, how did the dealership even know I refinanced?  Most importantly, is this money really mine to keep?  Getting an unexpected $500 check in the mail seems too good to be true! 

Established Member
brownidgirl
Posts: 18
Registered: ‎04-01-2011
0

Re: Gap insurance refund after refinancing???

When I refinanced I had to request the refund myself! I had to send in copies of paperwork where I refi'ed. My refund came from the company the GAP insurance was thru. Yes it's yours to keep! You no longer have GAP insurance thru them, you voided the contract when you paid the loan off. So if you didn't include it in your new loan... you don't have GAP at all now.

Valued Contributor
usmc58555
Posts: 1,668
Registered: ‎02-18-2009
0

Re: Gap insurance refund after refinancing???

Lets clear some things up here.

 

GAP or Guaranteed Asset Protection is a seperate insurance product you buy, basically because the amount you owe on yo car may or may not be near what your car is worth to an insurance company paying on a total loss for the car.  You owe say $15,441 on your loan that was just totaled in a car accident, the insurance pays out the Value of your car which is say $10,890 and you as the accident victim must pay the finance company $4,551 to settle your loan. Or try to roll it into a new loan. Either way you are on the hook for the "gap" between what the vehicle is worth and what you owe the finance comapany. GAP is a very recommended product for loans that did not have a large amount put down, or that rolled a lot of neagative equity in.

 

GAP for most people is a secondary product purchased through another company, prepaid in full at loan inception and rolled into the deal. The particulars of your deal, value, term may or may not have been factored into what your GAP cost. It exists specifically for that loan and the terms of that loan. Since you paid the loan off the GAP is no longer needed for the loan, hence you got a refund.

 

The $500 dollar refund check you got is a refund check for the unused, pro rated amount of GAP. It is the equivalent of you paying your 12 month car insurance premium in January, In March selling the car and not getting another so you cancel the policy.

 

Yes its your money.

 

As has been stated you no longer have GAP coverage, unless you purchased it yourself or the company that offered a refinance offered it.

 


valley_man0505 wrote:

Two years ago, I bought a truck from a local dealership.  The vehicle was financed through Wachovia (later became Wells Fargo), and this financing was set up by the dealership.  Last month, I refinanced this loan through a local credit union.You should check and see if the credit union offers GAP.

 

Last week, I received a check from the dealership for just over $500 for "Gap refund".  I did have Gap insurance included in the original financing, but I really am not clear on how this works.  On my original purchase papers, it shows $799 included in the loan for Gap insurance.   The refund I received works out to be prorated (i.e. I had the loan for just under 2 years out of the 5 year loan, so there was just over 3 years left; 3/5*800=480). 

 

I am confused by this.  First, why is this coming from the dealership itself and not from the Wachovia/Wells Fargo? I do no thave a copy of your loan/contract, in all probability the GAP coverage was not purchased through through that bank but through a third party. Secondly, how did the dealership even know I refinanced? They didn't. Many GAP or third party insurance providers send the check back to the dealership to keep you as a customer working with them. Say you total your car, you have GAP, you call the dealership to ask about how to get your GAP coverage claim initiated/ payment, the dealership benefits by being able to offer to sell you a new car.  Most importantly, is this money really mine to keep? Yes But you no longer have GAP coverage. Getting an unexpected $500 check in the mail seems too good to be true! You paid for 5 years of a service yo no longer need or can use you are getting a refund of that payment. There is nothing unusual about it, but be aware you are no longer covered by GAP.

As a side note. The GAP check may have been mailed to the dealership, but it is in your name.


 

 

 

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Regular Contributor
stoopidmunkee
Posts: 207
Registered: ‎01-28-2009
0

Re: Gap insurance refund after refinancing???

 

It's nice they gave you your money back I had to fight for mine it felt like.  I also had to fight to get my extended warranty money back as well when my car got totalled, what stinks about the whole refund process for me was they used the date I came in to cancel both items as cancellation dates instead of the date my car insurance company totaled my car out, since they didn't have to refund me as much money back.

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Valued Contributor
usmc58555
Posts: 1,668
Registered: ‎02-18-2009
0

Re: Gap insurance refund after refinancing???

Most companies do pro rate from the day you tell them and not from the day of the event.
Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,
Established Contributor
valley_man0505
Posts: 879
Registered: ‎05-29-2008
0

Re: Gap insurance refund after refinancing???

Thanks for the input everyone--you confirmed what I thought was going on after I did my research.  Once I started digging into this, I started to vaguely remember the salesman discussing the GAP ins. when I was doing the original financing.  There was very little info on it in the paperwork I had from the sale, though, so I wasn't completely sure.  In fact, the only mention of it on the paperwork was an line item adder to the "amount financed" where someone had hand-written "GAP".  So, I have no idea where the policy actually came from.  I guess it doesn't really matter anymore.

 

 

Valued Contributor
Schoolbuskid
Posts: 1,926
Registered: ‎10-23-2007
0

Re: Gap insurance refund after refinancing???

How can this be verified? Is this a genaral law? or something that has be in your contract?

Moderator
pizzadude
Posts: 9,674
Registered: ‎01-28-2010
0

Re: Gap insurance refund after refinancing???

 

It is probably in the GAP contract, read carefully and check all the fine print.

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Established Contributor
mross1080
Posts: 526
Registered: ‎04-21-2010
0

Re: Gap insurance refund after refinancing???


Schoolbuskid wrote:

How can this be verified? Is this a genaral law? or something that has be in your contract?



Checking your contract is the best way. Im pretty sure from my experience most have a clause for giving a refund. Best bet is to call the dealer you got the car from and talk to them about it. Last time I needed a refund I called the dealer and they actually took care of everything for me and I got my check a couple weeks later.

New Visitor
smartgear
Posts: 1
Registered: ‎12-17-2012
0

Re: Gap insurance refund after refinancing???

I just traded in my 2009 Honda Accord on new vehicle. I contacted Honda about GAP refund last week.  Today I got a check for a whopping $11.17.  I'm not sure how thet arrives at this amount.  Payoff on Honda was $15000+


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