GAP GAP Loan & Lease Fundamentals 2

Question 1

In vehicle leasing, the 'residual value' is best defined as:

Accepted Answer

The projected value of the vehicle at the end of the lease term

Answer

Residual value is the estimated market value of the vehicle at lease-end, set by the lessor at origination; it determines the monthly payment and the buyout price.

Question 2

The 'money factor' in a vehicle lease is most analogous to which loan concept?

Accepted Answer

Annual percentage rate (APR)

Answer

The money factor is the lease equivalent of an interest rate; multiplying the money factor by 2,400 converts it to an approximate APR for comparison purposes.

Question 3

Which event automatically triggers the calculation of the GAP benefit under most GAP contracts?

Accepted Answer

A total loss declaration by the primary auto insurer

Answer

A total loss declaration by the primary insurer is the triggering event for GAP; partial losses, recoveries, and financial events like bankruptcy do not activate the GAP benefit.

Question 4

If a vehicle is stolen and never recovered, how is it typically classified for GAP claim purposes?

Accepted Answer

Total loss, making the borrower eligible for the GAP benefit

Answer

An unrecovered stolen vehicle is declared a total loss by the primary insurer, which triggers the GAP benefit just as a physical total-loss event would.

Question 5

A GAP claim calculation typically starts with the primary insurer's ACV settlement and then:

Accepted Answer

Adds any deductible reimbursement and subtracts exclusions to arrive at the net GAP benefit

Answer

The net GAP benefit equals the loan payoff minus the ACV settlement, adjusted by adding any covered deductible and subtracting any excluded amounts (e.g., past-due payments, prior damage).

(GAP) Guaranteed Asset Protection Certified Practice Test

(GAP) Guaranteed Asset Protection Certified Practice Test

GAP GAP Loan & Lease Fundamentals 2