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February 2014 Archives

Games Dealers Play: Should Consumers Buy GAP Protection?

GAP protection covers the scenario where a motor vehicle is totaled in an accident or stolen and not recovered. Insurance will pay for the retail value of the car minus the deductible. If that is not enough to pay the car loan, the consumer is responsible for the difference. If a consumer has GAP protection, they theoretically will not have to pay that difference (but, read on - many consumers learn that they do not have the protection that they think that they have). The term "GAP", which evokes the image of a gap between the insurance payout and the outstanding loan balance, is sometimes used as an acronym for product names such as "Guaranteed Asset Protection" or "Guaranteed Auto Protection".

Games Dealers Play: Inflating the Down Payment

When we evaluate a potential client's contract documents, we always check to see whether the contract accurately shows the amount paid as a down payment. A few weeks ago, we discussed the problem of some car dealerships not crediting the full down payment to a vehicle purchase. . A very different problem - and one that we saw far more frequently - is when a contract shows a higher down payment than the amount that the consumer paid. For example, a consumer may give a dealership $1,000 down, but the contract may show that the consumer paid $3,000. Sometimes, the dealership is quite open about this. We have even seen dealerships advertise that they will give consumers more "credit" for the down payment than the amount that they actually pay. Other times, the consumer has no idea that the down payment was inflated.

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