Senate Cents: A Financial Wellness Blog

Share:

Understanding GAP Coverage: What It Is, Who Needs It, and Why It Matters

Published: May 15, 2025

Understanding GAP Coverage: What It Is, Who Needs It, and Why It Matters

When you drive off the lot in a new vehicle, the last thing on your mind is a worst-case scenario. But accidents, theft, and depreciation can happen faster than you think. That’s where GAP coverage comes in—helping to protect your auto loan and your financial peace of mind.

What Is GAP Coverage?

GAP stands for Guaranteed Asset Protection. It covers the “gap” between what your car is worth and what you still owe on your auto loan if your vehicle is totaled or stolen.

Most insurance policies only cover your vehicle’s actual cash value (ACV)—not the balance on your loan. Because cars depreciate quickly (often losing more than 10% of their value in the first month), this can leave you paying off a loan on a car you no longer have.

GAP in Action: Real Example

Your car is totaled in a crash. You bought it for $35,000 just last year.
Your insurance pays the actual cash value: $30,000
You still owe on your loan: $32,500
GAP pays the $2,500 difference so you’re not stuck covering that balance out of pocket.

Without GAP coverage, you'd be paying off a car you can't drive—plus dealing with the costs of replacing it.

Who Needs GAP Coverage?

GAP isn’t required—but it’s highly recommended if any of the following apply to you:

  • You purchased your car within the past 12 months
  • You financed your car with less than 20% down
  • Your loan period is 60 months or longer
  • You rolled negative equity from a previous vehicle into your current loan
  • You are underwater—your loan balance is higher than your car’s value
  • You drive your car a lot, increasing both depreciation and accident risk

GAP gives you protection when you're most financially vulnerable—especially in the early years of your loan.

When You Might Not Need GAP Coverage

While GAP is a valuable tool for many borrowers, there are situations where it may not be necessary:

  • You paid a large down payment when purchasing your vehicle
  • You’ve paid down enough of your loan to owe less than the car’s value
  • You purchased your car with cash
  • You got an exceptional deal on your car and it’s worth more than you owe

You might also decline if covering the gap out of your savings would be easy for you—and you're comfortable that the risk of totaling your car is low.

How Much Does GAP Coverage Cost?

At many dealerships, GAP can cost $800–$1,200, often rolled into your financing. That’s a high price for peace of mind.

At USSFCU, GAP is available for just $499—a one-time flat rate that covers your loan for its entire term. You can pay it up front, roll it into your loan, or add it later (and for a limited time, it's free with qualifying loans—see details below).

Bonus Protection: Auto Deductible Reimbursement (ADR)

With GAP at USSFCU, you also get ADR at no additional cost, which reimburses you up to $500 per insurance claim deductible—with unlimited claims for 3 years.
It applies to any personal-use vehicle you own or lease and insure under your name—even if you never file a GAP claim.

 Note: ADR does not apply to RVs, motorcycles, boats, or vehicles used for commercial purposes.

GAP PLUS: Get It FREE Through July 31!

From now through July 31, 2025, USSFCU members who finance or refinance a new or used auto loan of $10,000 or more will receive GAP Plus at no additional cost—a $499 value.

To qualify, simply enter or mention promo code "GAP PLUS" when applying for your auto loan.

Additional terms and conditions apply. Visit ussfcu.org/GAP for complete offer details.

Why Choose GAP from USSFCU?

  • Flat $499 rate (or FREE during the promo period)
  • Includes Auto Deductible Reimbursement—unlimited claims for 3 years
  • $1,000 credit toward your next loan if you finance through USSFCU after a GAP claim
  • Flexible enrollment—add anytime during your loan
  • 90-day free-look period with full refund
  • No hidden dealer markups

Protect your loan. Protect your wallet.
Learn more at ussfcu.org/GAP or call 800.374.2758 (option 4) to talk to a loan representative today.

Join Us for an Upcoming Webinar!

Expect the Unexpected: Smarter Loan Protection Strategies

Wednesday, May 21 | 6:00 PM ET

Life is unpredictable. Discover how GAP, Mechanical Repair Coverage, and Debt Shield can help protect your finances and give you greater peace of mind when the unexpected happens.

Register Now

Article content is provided for information purposes only.

All loans are subject to credit approval. Rates and/or credit limits are based on creditworthiness, income, and debts. Not all applicants will qualify.

View all posts

Members' Voice Testimonials

This credit union is the best, I love the customer service and you can't beat the interest rates. I'm happy to be a member of this great credit union.

- James · Locust Grove, GA

The branch manager introduced herself and was extremely helpful. She stated that if there is anything we ever need to please let her know. Very positive experience!

- Larry · Cumberland, MD

Greta was absolutely amazing - as always. She makes me and my parents feel valued and supported. We are forever grateful. [The Credit Union] has been hugely supportive over many years. And we feel known and cared for.

- Eliza · Washington, DC

Long as I have been with the credit union, I haven't had any problems. I also like the protection on my account.

- Charles · Upper Marlboro, MD

My overall experience at the credit union was exceptional. The staff was hospitable offering water, my service was timely and professional and the office was well lit and clean.

- Denise · Washington, DC

As a member for more than 40 years, i have always had great service from the USSFCU and know that they stand behind their great reputation.

- David · Silver Spring, MD

A top rate Credit Union, [I'm] privileged to be part of! Thank you for all you do for our family! USSFCU Credit Union was able to resolve our financial situation - vehicle, personal loans, customer service/recommendations, within 6 months. We belonged to another credit union for over 20 years, with results not even close to comparison. We switched ...

- Manuel · Bowie, MD

Your people and products are amazing. The recent [online banking] overhaul is phenomenal. [I've] been electronic banking since Tele action phone banking - paying bills with my push button landline decades ago. USSFCU is light years ahead of everyone else in terms of ease of use and client experience!

- Misty · Brookings, OR

I have been a member for more than 30 years. I no longer reside in the DC area but continue to bank with USSFCU because of the ease and the customer service.

- Tamra · Denver, CO

I have been a member for over 50 years, and I have always gotten good service with loans, when I had to have service at a branch, and when I needed to have money sent to me from my savings account. The personnel have always been friendly and treated me with respect.

- John · Fort Washington, MD

I especially appreciate being able to quickly speak with someone (not a robot) and that person has always been knowledgeable and helpful.

- Bernard · Richmond, VA

Excellent customer service streamlined and transparent process. The representatives are efficient, knowledgeable, and understanding of the type of loans offered by Credit Union.

- Erwin · Ellicott City, MD

The USSFCU behaves as a credit union ought to behave. The staff works with and for the members, not for a corporate board. Interest rates for a car loan, a home improvement loan, and a mortgage are low and terms are transparent.

- Ruth · Takoma Park, MD

Staff are courteous and friendly to work with. Very knowledgeable about services and products offered or available. Excellent follow-up with customers.

- Jacquelyn · Sanford, FL

I have appreciated USSFCU services for many years since I left my work on Capitol Hill. I have appreciated the occasional webinars on purchasing a home or retirement planning.

- Jamie · Washington, DC

I have been a member since 2006, and have always appreciated the customer service response to any concern or query. In addition, as I have traveled extensively, USSFCU has provided support and access.

- Kathleen · Ukiah, CA

I've had a credit union account for decades, even though I no longer work on Capitol Hill. I now have two accounts. I've been able to do all of our banking remotely, by app or by phone.

- Richard · Washington, DC

I have been a USSFCU member for almost 20 years. There is nowhere else I want my money to be. I always receive excellent service.

- Nicole · Alexandria, VA

I deeply appreciate the stellar service, the proficiency, the professionalism, and the kindness. I am truly honored and grateful to bank with a financial institution that treats customers like family.

- Angela · Alexandria, VA

Read More testimonials.