Your RV is your ticket to freedom. It’s the force that sets you loose upon the world, a home base that goes where you go. Until it isn’t.
Let’s face it: Part of the magic of the road is that anything can happen, including accidents or theft. If misfortune strikes and your motorhome gets stolen or totaled, will your insurance payout free you from your loan payment? Or will it leave you saddled with leftover debt?
The answer may depend on whether or not you have RV Guaranteed Auto Protection (GAP).
What does GAP do?
GAP is important to have if you owe more than the market value on your RV, travel trailer or camper—known as being upside-down on your loan. It’s what happens when you finance a vehicle and its value depreciates faster than you can pay down your principal balance. When you buy a brand-new motorhome, for example, it instantly drops in value the moment you drive it off the lot. And driving it more than 15,000 miles a year can accelerate its depreciation. You may also find yourself upside-down on your RV loan if you finance add-ons, make a low down payment or choose a loan term longer than four years.
Should your RV get stolen or totaled, your insurance policy will only reimburse you for the current market value. If you still owe $30,000 on a motorhome worth just $25,000, you’re responsible for the difference. As if losing your home away from home wasn’t bad enough, you would be stuck paying for a motorhome you no longer have.
GAP helps cover the difference between what you owe and what your RV is worth, up to 125 percent of its market value at the time of purchase. If something happens to your vehicle, RV GAP can help ensure you’ll be able to pay off your loan in full, even if your insurance payout falls short.
What happens if you don’t have GAP?
Not buying GAP leaves you—and your credit—vulnerable to accident and theft. Let’s say your RV gets stolen and you end up in the hole. What are your options?
- Best-case scenario: Keep making monthly payments (with nothing to show for it) until your loan is paid off.
- Not-so-great choice: Wipe out your savings to pay it off right away.
- Avoid if at all possible: Default on your loan and get a black mark on your credit.
All of these options will leave you financially worse off. RV GAP, on the other hand, allows you to recover from your loss more quickly and move forward with a clean financial slate.
Where can you get it?
When you finance your RV with OCCU, you can easily add GAP to your loan, with the option to pay either a one-time fee or roll the cost into your principal loan balance. Even if you opted out of GAP at first, you can still add it anytime within the first two years, as long as your vehicle hasn’t been stolen or totaled.
If you’re applying for an RV loan, or if you’ve financed your RV in the past two years, ask your loan officer about GAP. It’s the best way to ensure your ticket to freedom doesn’t leave you burdened with meaningless debt.