Sadly for me, I’ve reached the age at which I can start saying “when I was a kid” to reference the drastic differences between today’s world and the world of my youth. When I was a kid (see what I mean?) my parents drove a Pontiac Grand Prix with a center console between the front seats. This was “my seat” when the family went on a drive. I would proudly perch myself on this armrest knowing this gave me the best view of the road and that I wasn’t relegated to the lowly third-class backseat and seatbelt. Keep in mind, this seating arrangement was completely acceptable at that time and not a sign of neglectful parenting.
Now, decades later, my wife and I have a daughter of our own and not once have we considered allowing our toddler to ride on the console of our car. Instead, we strap her into the highest safety-rated car seat we could find, positioned in the safest place in the vehicle, and perform a triple check of her “NASCAR’esque” seatbelt harness. What I’ve discovered from my reflection of the seating arrangements of my youth versus today’s is that there is an evolution of what is considered standard and acceptable. For example, prior to 1998, air bags were not required in all passenger vehicles. Some luxury automobile manufacturers included them, but they were not an industry requirement until 1998. Today, they are not only a requirement, but the industry standard. When it comes to consumer safety and confidence, there will always be companies that stand apart from the crowd and provide more than just the ‘industry standard.’
Stand Out From the Crowd
When it comes to the products and services your credit union offers, you too can evolve from offering the basic, industry standard, to something that stands out from the crowd and goes above and beyond for your members. When you mention Guaranteed Asset Protection (GAP), most people in the lending industry get a similar mental picture. They see the “GAP graph,” inevitable vehicle depreciation, and a GAP claim payout that covers the remaining balance of their borrowers’ loan—in most cases. It’s the “most cases” that should give borrowers and lenders alike cause for concern.
If you’ve ever dealt with the GAP claims process, you’re probably familiar with the situations in which a GAP payout may potentially leave your borrower with a balance on their auto loan. While your borrower is knee-deep in the stress and devastation of a totaled or stolen vehicle, they then get the pleasure of learning—from you, their trusted lender—that even after their GAP claim, they are left with a balance that will either have to be paid in full or rolled into their new auto loan, increasing their vehicle payment. We conducted a comprehensive analysis of 10s of thousands of the GAP claims that we process and found multiple cases where borrowers were left with a balance of more than $1,000 after their insurance and GAP payout. This is not a good customer experience, and although it’s not your credit union’s fault, your members are going to place the brunt of the blame squarely on your shoulders.
A New and Improved Way to Offer GAP
Based on our analysis and the things we learned from talking with our clients about their challenges, we set out to improve our GAP product—a coverage we’ve been offering for 20 years with very positive feedback. A common concern we identified was that borrowers who received GAP benefits were not necessarily put in the best possible position for their replacement vehicle. Our goal is to not only protect borrowers and lenders by reducing the deficiency balance on a totaled or stolen vehicle, but to foster loan retention. Our newest product, GAP with PowerBuy™ does just this by covering the difference between what insurance covers and the amount your borrowers owe on their auto loan and providing them with up to $5,000 to apply towards their replacement vehicle—financed with your credit union. GAP with PowerBuy is a step above the industry standard and it’s a win-win for both you and your borrowers.
Learn more about GAP with PowerBuy and download our claims analysis by clicking here.
“They always say time changes things, but you actually have to change them yourself.” —Andy Warhol