Kohn, Swift & Graf is investigating reports that Wells Fargo failed to refund auto loan GAP insurance to customers. GAP, short for Guaranteed Asset Protection is insurance that is purchased when the amount a borrower owes on their car loan may be more than their car is worth if it is totaled in an accident.
The third-largest bank, Wells Fargo, is being investigated for failing to refund auto gap insurance to their customers, whose auto loans were paid off early. This may affect you! Accordingly, the following states require full refunds of unused finance GAP insurance. Remaining states require a credit to borrower’s account.
• South Carolina
Auto Finance GAP Insurance – How It Works
If you purchased a new car for $30,000 and eight months later it is totaled in an accident, the insurance company may only pay the current value of the vehicle, which may only be $27,000. You, however, still owe $29,000 to the bank that financed the car. The gap between the $29,000 still owed and the $27,000 value of the car is filled by auto loan gap insurance. Gap insurance is usually prepaid in full at the time the car is purchased and rolled into the loan amount. Once you—or another borrower—pay off the loan, the original auto gap insurance is no longer required.
Learn more about how KS&G’s investigation might help you. If you obtained finance gap insurance from Wells Fargo, and you weren’t provided a refund, or your account wasn’t credited for unused insurance, please contact us.