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A home is the largest investment most people will make during their lifetime, but for many, an automobile is a close second. Home prices have recently trended downward; the prices of new and used cars, however, have not. As loan amounts increase with the price tag of today’s high-tech vehicles, so does the borrower’s risk of facing a gap between what they owe the lender and the amount the auto insurance will cover if the vehicle is stolen or totaled in a collision.
Most primary auto insurers will only pay the actual cash value (ACV) on a stolen or totaled car. Without guaranteed asset protection (GAP), your borrowers could face a substantial disparity between what they owe on a car loan and what their insurance will pay if their car is stolen or totaled in an accident. Credit unions can make GAP available on loan to values (LTVs) ranging from 90% up to 150% of the manufacturer’s suggested retail price (MSRP).
The Insurance Information Institute reports that every year there are more than 700,000 cars stolen in the United States, and the U.S. Department of Transportation reports that several million vehicles are involved in serious accidents — accidents that result in the car being totaled.
Consider these additional sobering facts:
Clearly, there is a strong need for car buyers to secure better protection for their automobile purchases such as Transamerica’s* AutoShield Guaranteed Asset Protection. Credit unions and other financial lenders can offer this valuable product at the point of sale or via a post sale direct mail solicitation. AutoShield GAP is backed by Transamerica’s century of service in offering insurance and investment products.
This product can be an excellent door opener for new accounts. It can also offer incremental sales opportunities as well as the chance to strengthen the relationship between borrowers and financial institutions by increasing borrower touch points. Research indicates Transamerica’s turnkey direct mail programs are the preferred sales channel, as credit unions can extend the offer of GAP in a non-invasive setting in case the borrower had not been provided the chance to take advantage of it earlier in the lending process. Enrollment via a customized website, outbound telephone calls, and at the point of sale — either at the time the loan is secured or after — are also available to complement direct mail enrollment channels. These additional options provide consumers with sales channels best suited to personal preferences.
Perhaps most important of all, GAP provides the borrower with peace of mind by eliminating the risk of out-of-pocket expenses.
This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.
If you are interested in contributing an article on CreditUnions.com, please contact our Callahan Media team at email@example.com or 1-800-446-7453.
October 14, 2013
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