Your Car Loan Ended Early. Part of That GAP Premium Is Yours, and Nobody Will Mail It to You.

If you paid off a car loan early, refinanced it, traded the car in, or had it repossessed, there’s a good chance your lender is sitting on money that belongs to you.

It’s the GAP coverage the finance office sold you. You paid for the full loan term up front. The loan didn’t last the full term. The unused part is a refund.

Almost nobody asks.

GAP, in the CFPB’s words, is “an optional product that is intended to cover the difference between the amount you owe on your auto loan and the amount the insurance company pays if your car is stolen or totaled.” It’s a reasonable product if you’re underwater on the car. The trouble isn’t the coverage. It’s what happens when the loan ends ahead of schedule.

Say you bought 72 months of GAP and refinanced at month 30. You paid for 42 months of protection you will never use. The CFPB is not vague about whose money that is: “You may be entitled to a refund if you sell, refinance, or prepay your auto loan.”

Entitled. Not “may wish to inquire.”

Here’s what they don’t tell you. The refund usually doesn’t show up on its own. Somebody has to ask, and the somebody is you.

Look at Colorado, where the attorney general has spent years running this down one lender at a time. Since 2019 that single office has recovered over $23.5 million for nearly 132,000 Coloradans who were owed unearned GAP fees and never got them. Wells Fargo sent back $9.5 million to more than 50,000 people. Bellco and Canvas returned $4 million to 49,487. Ent, Public Service Credit Union, and Credit Union of Denver returned $6.5 million to 22,318.

These aren’t storefront lenders. That’s your bank and your credit union.

Average it out and it’s roughly $178 a person, in one state, only where a regulator went looking. Nobody is running that play in most of the other 49.

And $178 undersells it, because most people don’t write a check for GAP, they roll it into the loan. The CFPB points out that financing it means paying interest on it for the life of the loan. You borrowed money to buy protection you didn’t use, then paid interest on the borrowing.

Do this now. Find the sales contract from the day you bought the car and look for a line reading GAP, Guaranteed Asset Protection, or GAP waiver. Note the amount. Call the lender that held the loan, give them the payoff date, and ask for the unearned GAP refund. Ask in writing. Then call the administrator named on the GAP contract, because it’s often a separate company that’s happy to let each side point at the other.

If you get a no, or you get nothing, file a complaint with your state attorney general and with the CFPB. Colorado’s $23.5 million started with people complaining.

Still making payments? There’s a second move. The CFPB says that when an add-on is optional and you rolled it into the loan, “you have the right to cancel it during the term of the loan, which can save you money.” And it was optional in the first place: “Generally you cannot be required to buy an extended warranty, GAP insurance, or credit insurance.”

Twenty minutes on the phone against a few hundred dollars. Worth shopping. Run the numbers through our loan calculator to see what a refund does to your payoff date, and if you’re about to finance the next car, read what we rank and why before you sit down in the finance office.

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