Gap insurance can be misleading: It may not fully cover a totaled car

gap-insurance-does-not-cover-all

Question: All this information is very helpful. My issue is I have a auto loan that is in Closed status / Charge off amount. We opened the loan in 09/2012 and vehicle was totaled in 2015. The insurance company made payments to the creditor and then stopped with not notification that did so. We had GAP insurance also and was told that would pick up the rest. We had perfect on time payments until this all happened and it shows late payments. Also on the credit report it doesn’t show the payment we made from 2012 to 2013 and then it says last payment 07/01/16 which we haven’t made any payments since May of 2015. We have tried to dispute this but the company sent back a letter with the same info I sent them along with a statement letter. Not sure how to resolve this , it is really holding us back from getting a home loan.

Another issue is we paid off another auto loan and they have late payments on there even after we made arrangements ( this is a newer acct opened in 02/2014 and closed 11/2017) . How can I get the late payments taken off.

Gap insurance will only pay the actual cash value (ACV) of the car at the time of the loss. The rate of depreciation of your car, combined with the interest you’re paying can leave you in a situation where the value of the car is worth less than the amount owed on the car.

GAP (Guaranteed Auto Protection) coverage is misleading. The guarantee is that in the event of a total loss, GAP insurance will cover your financial obligations. Gap insurance may not cover the total amount owed when the loan amount is too high. You are still legally obligated to make monthly loan payments to the lender until the loan is paid off if the gap insurance did not fully cover the remaining balance.

Any proof or documentation you have to back up your claims of positive payment history from 2012-2013; being told gap insurance would cover the loan; and making no payments after 2015 should be submitted when initiating a dispute with the credit bureaus or a dispute directly with the lender.

If you don’t have proof, then I can only suggest you engage in the complaint process with the Consumer Financial Protection Bureau as well your state’s attorney general and the BBB for the lender reporting inaccurate information to the credit bureaus. I would start with the CFPB first. They may be able to resolve the matter with no further action needed. It’s good that you disputed first with the credit bureaus and now have the “statement” the lender submitted to you. That really is insufficient. Be sure to include it with your complaint.

Once you submit a complaint with the CFPB they’ll contact the lender on your behalf with the issue and the resolution you desire. They have a time-frame of 15 days to send submit your complaint and get a response from the lender.

As to the other car, making payment arrangements insures the car is not repossessed as long as the agreed upon payments are met in addition to reducing late fees. Payment arrangements do not prevent the lender from reporting lates to the credit bureaus unless you included as part of your arrangements that late payments would not be reported to the credit bureaus. You should contact the lender and request a goodwill removal of the late payment notations. There are several ways to dispute late payments to get them removed from your credit reports. Take a look when you get an opportunity.

 

Leave a Reply

Your email address will not be published. Required fields are marked *