They can offer you GAP insurance when you buy a vehicle. GAP insurance covers the difference (gap means “gap”) between the amount you owe on your vehicle loan, and what your insurance would pay if your vehicle is stolen, damaged, or totally destroyed.
You don’t have to buy this insurance, but if you want it, shop around. Lenders can set different prices for this product.
It is very rare for a lender to require you to purchase GAP insurance. If you are told that it is mandatory to purchase a product like GAP Insurance, ask where this is written in your sales contract. If the contract does not expressly state it, they cannot oblige you to buy it.
If you are told that you must purchase GAP insurance to qualify for financing, contact the lender yourself and find out if this is true. If this is the case, the cost of GAP insurance should be included in the financing cost, and it should be reflected in the annual effective rate (APR). If optional, GAP insurance can be excluded from the finance cost and APR. If you have a complaint or concern about this insurance