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  1. #1
    lizag4709 is offline Junior Member
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    Jun 2007
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    GAP insurance did not pay off balance

    What is the name of your state? California

    In October of last year I had a car accident (my fault) where I totaled my car. I had GAP insurance at the time and my auto loan was current.

    I reported it to my insurance which deemed my car a total loss and paid most of the amount owed to my finance company Roadloans. Approximately a $5000 balance remained. Roadloans then initiated a GAP claim with Virtual Lending Source who took months to resolve the matter and paid out only about $1,300 of the balance due.

    While VLS was researching the claim I went out and bought a new car and did not continue sending payments to Roadloans because my understanding of GAP insurance was that it would take care of the unpaid balance. I now receive a letter from Roadloans stating I have a balance owed to them of over $3,000 and if I don't take care of the balance they will begin to garnish my wages.

    I was upfront with Roadloans about not making payments on a totaled car because I now had an obligation to pay the new car and could not make payments on two cars.

    Is it legal for the GAP insurance to not cover the balance due if at the time of loss I had not defaulted on my loan?

    And can Roadloans really garnish my wages over this balance due?

    Is there anything I can do to prevent this from happening. Roadloans has already flagged this account as a write off and reflected it as such on my credit. I don't want this matter to get any worse but I don't really think it is fair and feel as though someone is trying to take advantage of the situation.What is the name of your state?
  2. #2
    racer72 is offline Senior Member
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    When you called Virtual Lending Source, what were you told?
    If you feel my answer is rude, mean, snarky or in anyway not to your liking, I did my job. You don't need to tell me.

    No private messages, I do not reply to them.
  3. #3
    alnorth is offline Member
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    Apr 2007
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    By Virtual Lending Source, I assume that means you bought your GAP coverage from someone other than your insurance company. That was probably a mistake. You should almost always buy GAP coverage from your car insurance company because they are usually much cheaper than what the dealer, bank, etc will offer, they usually give much better coverage, and theres less delay and possible misunderstanding of what the gap is when the same company is handling both sides of the gap.

    Here's a few possible exclusions or rules that are sometimes present in bad gap policies that are usually not found in the better gap policies offered by most car insurance companies. Some, all, or none of these may apply to your case.

    1) Maximum limit of loss
    2) GAP payment does not include extras like rustproofing, extended warranties, etc. (Actually this is often in most gap coverages, including the better ones from the insurance companies, they pay for car loans, not more insurance contracts)
    3) GAP payment doesnt cover all when the amount financed is X% greater than the value of the car
    4) Loan amount too high
    5) Loan term too long
    6) Loan interest rate too high
  4. #4
    alnorth is offline Member
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    Apr 2007
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    Just remembered a fairly common exclusion that is hitting more and more people these days, present in almost all GAP policies. A lot of people will trade in new cars every few years, they are upside-down on the old car, and they roll the balance into the new loans.

    GAP coverage usually does not pay for financing from old cars that were rolled into the current loan, they will only pay the financing for this car, not all the cars you may have had before.

    If your GAP coverage didnt cover it all, then you owe the unpaid balance and they can go after you like almost any other unsecured debt.
  5. #5
    moburkes is offline Senior Member
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    Quote Originally Posted by alnorth View Post
    Just remembered a fairly common exclusion that is hitting more and more people these days, present in almost all GAP policies. A lot of people will trade in new cars every few years, they are upside-down on the old car, and they roll the balance into the new loans.

    GAP coverage usually does not pay for financing from old cars that were rolled into the current loan, they will only pay the financing for this car, not all the cars you may have had before.

    If your GAP coverage didnt cover it all, then you owe the unpaid balance and they can go after you like almost any other unsecured debt.
    Hit the nail on the head. That is why this policy didn't pay. Yes, OP, garnishing your wages, after they win a lawsuit, seems like a good idea.
    My new signature:
    Originally Posted by arazi
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