GAP Insurance (guaranteed asset protection, also known as ‘shortfall insurance’) Adelaide loan applicants can purchase through Houston Finance is insurance against a shortfall that may occur in the event that your car, motorcycle, boat or caravan is stolen or written off, and your comprehensive insurance payout does not cover the outstanding balance on your loan.
This could leave you with a shortfall of thousands of dollars. A shortfall is more likely to occur when expenses such as stamp duty, registration, dealer delivery or insurance cover is added to the loan amount, or you are borrowing close to the full amount for the vehicle.
Generally, cars, motorcycles, boats and caravans depreciate faster than loans for them are paid off and because comprehensive insurance only covers the vehicles value, a gap or shortfall is left on the loan.
GAP Insurance covers a potential shortfall between your comprehensive insurance payout and the payout figure for your loan.
Benefits Of Gap Insurance
- Eliminates your financial exposure to a shortfall between the comprehensive insurance payout and the balance outstanding on the loan (most gap policies pay up to $40,000)
- Eliminates the potential of having two loans,
- Protects your credit rating, if you struggle to pay the extra repayments,
- Can include an additional one off payment of up to $10,000,
- The gap insurance premium covers you for the full term of your loan and can be included in the amount financed,
- There are specific gap insurance policies for cars, motorcycles, boats and caravans.
Note: Lenders like gap insurance included in the loan due to the added security it provides them should a write off occur.
Who Is Eligible For Gap Insurance
Anyone who finances a car, motorcycle, boat or caravan that is covered with comprehensive insurance cover.