GAP Coverage for Financed Vehicles
If your vehicle is totaled or stolen, your insurance company pays what the vehicle was worth, not what you still owe. When there's a difference, it comes out of your pocket. GAP coverage cancels that difference. Available on financed vehicles at Frankman Motor Company, administered by DOWC.
Why a Gap Exists at All
A vehicle loses value fastest in its first years, and a loan balance comes down on a schedule that has nothing to do with that curve. Put the two side by side and for a stretch of the loan you owe more than the vehicle is worth.
If the vehicle is totaled or stolen during that stretch, your insurer pays the actual cash value, the vehicle's worth at that moment. Your lender still wants the rest of the balance. That shortfall is the gap, and without coverage you pay it on a car you no longer have.
The exposure is largest when you put little or nothing down, finance for a long term, or buy a vehicle that depreciates quickly.
How It Works
What This Product Actually Is
Our GAP product is a debt cancellation addendum to your finance contract, not an insurance policy. Rather than an insurer paying a claim, the creditor agrees to waive its right to collect the covered shortfall.
We're specific about this because the distinction is real, and because it changes one thing you need to know: GAP does not replace your auto insurance. You are required to carry your own comprehensive and collision coverage, and you file the total loss claim with your own carrier. GAP handles what's left after they pay.
Two Plans
Both plans cancel the covered shortfall between your insurance settlement and your loan balance. The difference is what happens to your deductible.
GAP
StandardCancels the covered difference between what your insurer pays as actual cash value and what you still owe on the finance contract, subject to the contract's limits.
GAP Plus
Adds Deductible CoverageEverything in the standard plan, plus:
- Covers your physical damage deductible under your primary insurance policy, up to $1,000
The Limits, Up Front
These are the numbers that determine whether GAP fits your deal. We'd rather you know them before you sign than discover them at claim time.
Maximum Benefit
The most the addendum will cancel on a covered total loss.
Maximum Finance Term
Finance contracts longer than 96 months fall outside coverage.
Deductible Benefit
GAP Plus only. Covers your physical damage deductible up to this amount.
What's Covered and What Isn't
Covered
- The covered difference between your insurance settlement and your remaining loan balance, up to the maximum benefit
- Total loss from a covered event, including theft
- Your physical damage deductible up to $1,000, on GAP Plus
- Can be included in your vehicle financing rather than paid up front
Not Covered
- Your cash down payment or trade-in equity
- Finance charges that accrue after the date of total loss
- Any amount above the $25,000 maximum benefit
- Vehicles with a salvage, flood, fire, or rebuilt title at the time of sale
- Amounts resulting from financing above the contract's maximum financing limit
- Late fees, past-due payments, and similar charges
Whether You Actually Need It
GAP is optional and it isn't right for everyone. If you put a substantial amount down (enough that your loan balance stays below the vehicle's value from the start), you may never have a gap to cancel. That's a legitimate reason to decline it, and we'll tell you so.
It's worth serious consideration if any of these describe your deal: you're putting less than 20% down, financing for 60 months or longer, rolling negative equity from a trade-in into the new loan, or buying a vehicle in a segment that depreciates quickly.
Kevin and Nate will look at your actual numbers (down payment, term, and vehicle) and tell you where you'd stand. If the math says you don't need it, that's the answer you'll get.
GAP Coverage FAQs
Run Your Numbers With Us
Tell us your down payment, term, and the vehicle you're looking at, and we'll show you where your loan balance sits against its value. If you don't need GAP, we'll say so.
This page is a summary and is not a contract. GAP is a debt cancellation addendum to your finance contract, not an insurance policy, and is not a substitute for auto insurance. Coverage, terms, conditions, exclusions, limits, and eligibility are governed solely by the addendum itself, which you will receive and may review before purchase. GAP is optional, is not required to obtain financing, will not result in more favorable financing, and has no effect on the terms of your purchase or lease. Obligor and administrator may vary by state. Not all coverage is available in all areas. Frankman Motor Company, 26874 SD Highway 11, Sioux Falls, SD 57108.