Academic research finds that consumers value guaranteed asset protection (GAP) and would recommend it to others.

There are numerous ways to gauge the value of a consumer product. You can scan the internet for user reviews, ask friends and family, and/or perhaps seek out third party ratings such as the Better Business Bureau (BBB). One of the most robust and obvious methods is to simply ask people that purchased the product.

A new academic research paper does just that.

Fielded by the highly regarded University of Michigan Survey Research Center and analyzed and authored by three financial experts — including two economists with the Board of Governors of the Federal Reserve System — a new study concludes that consumers find tremendous value in Guaranteed Asset Protection (GAP) Waivers that are available to them when financing the purchase of a vehicle.

GAP Waiver, available from lending institutions and auto dealers, is an optional consumer financial protection product that waives all or part of the debt the consumer owes when their financed vehicle is a total loss or unrecovered theft and shields purchasers from financial risks of losses exceeding insured collateral values.

The study, Consumers and Guaranteed Asset Protection (“GAP Protection”) on Vehicle Loans and Sales-Financing Contracts: A First Look, highlights that purchase of GAP Waivers on auto loans has “become fairly common since its introduction about three decades or so ago.” Importantly, more than 90% of GAP Waiver purchasers reported their view that GAP Waiver purchase is a good idea and would purchase the product again. Even 40% of non-GAP Waiver purchasers agreed that the voluntary product is useful.

Vehicle prices have been continuously increasing as new vehicle technologies emerge and in light of customer preference for CUVs, SUVs and light-duty trucks. Through October 2021, the average transaction price of a new vehicle was $41,421, according to the National Automobile Dealers Association (NADA).

According to the paper’s authors: “As vehicle values have increased…and credit requirements have eased with widespread prosperity and improved credit-granting ability through statistical credit scoring, it has seemed likely that the potential for “gaps” might have grown along with ready credit availability and the desire for GAP [Waiver] might have become more common.”

Of the GAP Waiver purchasers examined for the paper, about nine tenths say they would purchase the optional product again and would recommend purchase to friends and family member.

Clearly consumers find significant value in GAP Waivers. All you have to do is ask them.

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