Am I required to purchase an extended warranty, Guaranteed Asset Protection (GAP) insurance, or credit insurance from a lender or dealer to get an auto loan?
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Generally you cannot be required to buy an extended warranty, GAP insurance, or credit insurance. In most situations, they are optional.
You have the right to walk away and look for a different dealer or lender if they are pressuring you to purchase optional products or services for your loan.
What if a dealer or lender makes it hard for me to turn down optional products on my auto loan?
Extended warranties, GAP insurance, and credit insurance are optional when you take out an auto loan. And, if an add-on product is optional and you decide to add it to your loan, you have the right to cancel it during the term of the loan, which can save you money.
An extended warranty or service contract on your vehicle pays the costs of some repairs, above what the manufacturer’s warranty covers or after the manufacturer’s warranty ends. GAP insurance covers the difference (or gap) between the amount you owe on your auto loan and what your insurance pays if your vehicle is stolen, damaged, or totaled. Credit insurance is coverage that makes your auto loan payments if you are not able to.
Before you sign the loan papers, ask the lender whether the loan includes charges for optional products.
If your lender or dealer says you are required to purchase a product like GAP insurance or an extended warranty, ask them to show you where your sales contract says it is required. If the contract does not explicitly state that it’s required, you cannot be required to purchase it.
If you are turned down for a loan because you refuse to buy optional products, you can submit a complaint with the CFPB. You can also file a complaint with the Federal Trade Commission (FTC) and with your state attorney general or state consumer protection office . If you’re in the military, you should report this to your installation Judge Advocate General (JAG) immediately. Use the locator to find your JAG Legal Assistance Office .