5 Must-Do Steps to Protecting Your Members: GAP and Depreciation Coverage

Two Men Covering Car
(Last Updated On: May 26, 2022)

In this article, we will provide you with 5 essential steps you can use to better protect auto loan borrowers…and your institution! Have you read the short “introduction” article GAP & Depreciation Coverage: What Sets Them Apart?

All set? Perfect.

Here We Go!

Before we start, just one question: Is your team motivated to help members make smart financial decisions?

Yes? Or OH YES? Perfect, continue on.

5 Steps to Protecting Your Members: GAP & Depreciation Coverage Edition

  1. Education for the Team
  2. Introduce GAP/Depreciation Early – Content
  3. Loan Approval, or Excitement Builds
  4. Loan Closing Engagement
  5. Post Sale – Avoiding Buyer’s Remorse

All of them are important. You may not achieve every one now. That’s fine! Best place to start? Staff hearts and minds. Solicit ideas from your team to discover and address time, tech, or financial challenges.

Remember, your team is your greatest source of innovation. You just have to ask!

Step 1: Education for the Team

Person Writing on Paper
Be ready to take notes!

If you’ve made the decision to offer a service, you already deem it valuable for borrowers. Does your team have the same perspective? If not, why? Openly welcome these objections so you can process and address them. Plus, people just want to know they’re being heard.

While you’re at it, ask what they think and feel about your GAP and/or Depreciation Coverage programs.

Like other surveys, the only question which matters is: “Would you consider these add-ons for your next vehicle, and, would you recommend them for family and friends?”

If their answer tends towards the negative, what’s holding them back? Their confidence is directly connected to borrower buy-in. Unimpressed staff means an unimpressed borrower.

Plus, the process helps you enhance communication across your teams.

Depending on the reasons given, your response will vary. However, through our more than three decades of experience with GAP programs, the most common “objection” is cost.

For Depreciation Coverage, you can discover more with online research using search terms such as, “depreciation coverage complaints”, “depreciation coverage loan issues”, and others.

GAP Insurance Isn’t GAP Protection

Hand Holding Family Icon
Insurance protects. Protection…protects, but differently.

Financial institutions like yours offer GAP Protection. Insurance companies offer GAP Insurance. They’re not the same thing, from pricing to benefits, and even marketing compliance. When your potential borrowers search online, this may be a point of confusion.

Make sure to cover this difference during staff training, and also how to explain it to members.

Sidenote: We still run into this misunderstanding, even with people in the industry. To further the challenge, a large minority of credit unions present GAP as insurance on their websites. It’s not.

Training Overcomes Objections

Both your staff and members are going to look up these programs online. How do you respond when they find negative reviews of a credit union GAP or Depreciation program? A skeptical staff member may not offer with the same fervor, right? We don’t want that!

(It’s going to happen. Being prepared is the best approach.)

First, understand that thousands of GAP waivers alone are sold each year. Even with a 99.9% satisfaction rate, there’s still going to be some unhappy people. And you know that they’re the most likely to speak up. Here’s where training matters.

Make sure to work with a servicer which provides regular training. This way, you can proactively address every issue your staff encounters. Plus, this can be a safe space for them to voice their concerns and brainstorm how each can be overcome.

Two People in Training

Throughout industry publications, managers and executives love to share how FSRs have unique and helpful insights into all areas of member engagement. Embrace that perspective!

Keep a communication channel open, even outside training sessions, to help “nip issues in the bud” before they become member complaints. Then acknowledge staff for their involvement in creating a better member experience.

Finally, if you mention education, it’s tough for us to stay silent. In fact, due diligence is what we help you do on the GreenProfit Learning Library! Totally coincidentally, we have two perfect articles on GAP and Depreciation Coverage to get you started:

Reach members when they’re in-market & get strategic about direct auto lending. Grow revenues and accelerate the mission by educating on protection products early in their car buying journey.

Auto Loan Acquisition End-to-End Strategy Cheat Sheet Cover

Step 2: Introduce Coverage Early (Before & During Application)

The shift from in-person to digital, though initially forced, will only shift back so much. Digital transformation is here to stay.

Interacting with members in branches is possible, just less common. Branch traffic is shifting online (I think it’s interesting using a source from 2015 for that). Of course, that means your online and mobile auto loan applications are now the dominant interaction medium. Sure pales in comparison to the old member-to-FSR conversation!

But you’ve got some tools up your sleeve.

As before, you have phones. They enable some degree of the same conversation, but you know a phone chat just isn’t the same. However, it allows your FSR to help the member gather necessary documents and begin the process.

If you can’t get in touch (which isn’t uncommon), consider a Texting system to assist. Those get read, and fast.

Car on Screen
Does your car buying make them feel larger than life?

It’s also a great time to introduce your car buying service. Plus, the FSR can introduce your protection products. At this early stage, they can give your borrower a teaser on why things like GAP and Depreciation Coverage are worth their consideration.

Your goal is to make them familiar so when they’re brought up at loan closing, they aren’t seen as unnecessary upsells that get instantly declined.


Create Exciting Online Engagement

More borrowers than ever do it all on your website or mobile app. Sure, it’s “contactless”, but a challenge due to the lack of human connection it can also have.

So it comes down to introducing and piquing member interest in GAP and Depreciation Coverage, without ever seeing each other face-to-face or even speaking on the phone. How?

Content. Engaging content, to be precise. Engaging video content, to be annoyingly precise. (This may sound familiar from the discussion on VSC. It’s still important on these products.)

Videos To Educate & Open Minds

Stick a video from our “You’re Special to Us” series into the loan application process to quickly plant a seed. Start with the “fully protected loan”, then offer the product-specific ones (like GAP and Depreciation Coverage) later. Yes, they’re free for you to use right now.

And yes, it’s an entire series covering all of your standard auto loan protection products. Talk about taking immediate action!

Just to clarify, those are available at no cost to your credit union. Even if you don’t work with us today…or tomorrow. It doesn’t even matter which GAP and Depreciation programs you have; the videos fit them all. And of course, we never mention our name, because why?

Extremely tedious disclosure: At the end of each video, our icon logo displays in a cool animation with a copyright notice on the bottom. If that’s advertising, we’re really bad at it.

Where do you put such videos? Add them to your ancillary product descriptions portion of your website. Insert them in the app. Some credit unions share them on social media, and others display on their branch monitors (depending on your branch traffic).

If you love spending extra money and time, you can also make your own videos. Though we think ours gets the point across, we won’t be insulted if you pass on them. Just be sure to address both the pain points and benefits of your GAP & Depreciation Coverages.

We All Love Testimonials

User feedback is powerful. Thus, testimonials are also effective as content. Everyone loves a great story, and hearing how your GAP and Depreciation programs saved your members big money (and frustration) is valuable.

If you can encourage, or even reward, members for sharing their experience, that’s the start to some compelling content. I guarantee you have a member for which their GAP and Depreciation saved them from deeper financial struggles. Nice sale.

Whatever You Do, Make Members Aware

The whole goal is to ensure your members:

  1. Know you offer GAP and Depreciation Coverage (and other protection products)
  2. Understand at a basic level what they provide
  3. Recognize their potential value along with the loan (and how your institution’s version differs)
  4. Are aware that dealers can offer similar products at higher rates

Your credit union benefits when your members recognize how you can help them live a better life. In fact, everyone benefits, and that applies whether they finance through your direct or indirect channel.

Which leads us right into Step 3, discussing loan approval time.

Step 3: Loan Approval, the Time for Connecting

Loan Approval Cycle

Your member’s loan application is approved! Now it’s just up to them to decide to use you for financing. So, wait around, then? Not quite. You have tools in your belt. Of course, not everyone will want a direct loan. Some people just want to get it done at the dealer.

For those institutions which handle indirect lending, we’ve got a process for you, too.

Let’s start with the more profitable and less complicated approach, direct lending:

Direct Loan

Even if your system provides an automatic engagement, it’s still a perfect time to reach out to your member (through phone, email, or text). Help them discover your next steps along the process. Because, to them, the loan is a tool to get the car. You know it’s more than that.

But only if they’re able to take advantage of your extra protections.

How can you exceed member expectations while also providing tangible benefits? In other words, how can you help them save money now and possibly lots later?

Car Buying Service

Wait, how does a car buying service help protect members with GAP and Depreciation Coverage? It all connects. Stick with me.

Your car buying service can save members time and money during their search. Most importantly, it keeps them close, so you know where they are in the process. Did they already get a loan approved? Here’s your chance to discuss their choices and how they fit.

Plus, that car buying service can reduce the chance of your member getting “flipped” at the dealer. Which you know affects not only the loan proceeds, but also a shot at your protection products.

Depending on the car buying service you provide, it may let members get one more crucial piece of information during their process: A trade-in value.

Having an agreed vehicle purchase price is great. It provides assurance on the loan amount, which lets you discuss appropriate products. Having a guaranteed trade-in price lets a member (and your institution) have full confidence in their new purchase.

How many members use trade-in proceeds to help pay off their loan? Knowing this number early on can be valuable. It’s all about having sufficient and quality data to provide your members with the best options.

GAP, Depreciation, and Other Protection Products

Person Comparing Tablet and Paper
Help borrowers discover the value and existence of your programs.

That car buying service helped open the lines of communication. Use that opportunity to learn about their purchase plans. How much will they put down? (Now they know what their current car is worth.) If it’s under 20%, like most people, it’s an easy introduction for GAP.

Then, present the real costs and risks of a total loss. Follow up with a question on where they would get the down payment funds (you already know they’ve committed this time) again.

Make reviewing the GAP and Depreciation Coverage info easy and encourage setting up a short chat to help them see the potential value for them. At this point, it’s about all the great training your team has. And mentioning those cool videos one more time.

That way, when they are ready for loan closing, each protection product will come with the best understanding you can expect.


Sometimes members choose to do it while at the dealer. If you have dealer relationships, that’s ok, too. If you don’t, skip this section. Or stick around to learn some interesting facts about the dealer profit model. I mean, you’re here already.

So your member’s loan application came through a participating dealer. Two possible events occur:

  1. Your LOS verifies the member’s application meets your underwriting qualifications and provides instant approval, or
  2. The application is directed to an FSR for further review.

With our hypothetical member, everything is in order, they get a fabulous rate, and decide to use your financing. Then it’s off to the Finance & Insurance (F&I) representative at the dealership. Cue Beethoven’s 5th Symphony.

Dealer Profit Strategy

Line of Cars
Cars aren’t the thing dealers are selling.

Did you know? Outside of service, dealers make around a quarter of their profits from the F&I office. Inside, the member is offered GAP, possibly Depreciation, plus a menu of other protection products. Typically, they are more costly than those offered at your credit union.

We can’t speak to the benefits. But aren’t you offering an industry-best program? In that case, how could your members find anything better?

Despite that, your member may purchase these services through the dealer (and they do almost half the time), adding them onto the loan up to their approved amount. And they might be happy with what they receive.

However, if you followed the prior steps, they would know the benefit of purchasing through the credit union. At that point, would they decline and opt to purchase the protection directly? Maybe. Just another reason to encourage direct loans (and make them easy) whenever able.

Sidenote: Yes, yes I hear you. If your member went to a dealer, purchased a vehicle, and financed through your indirect channel, when could you have educated them? Fair question. And if they never reached out or used your car buying service, that is true.

For this scenario, we’re assuming they at least used your car buying service, so you knew they were in-market (which is its secondary benefit for indirect borrowers).

Thus, your car buying service is an essential part of helping protect your members with GAP and Depreciation Coverage. Wild, right?

Step 4: Loan Closing Like Humans

People Between Monitor
“Like humans…today.”

Contactless closing for everyone! Why look back? It’s the future! Only, it can be a detriment to your members and credit union. Especially if you just stick to the funding portion.

My own car loan was nearly contactless. I signed some forms online, clicked through a few prompts, and spoke to one person on the phone for a few minutes. That was it. Now that I think about it, the phone call was just a confirmation the process was moving along.

The “offer ancillary products” opportunity consisted of two screens I clicked past during the closing. “No thanks”, “No thanks”, and that was it. They were boring text descriptions of GAP, Payment Protection, and VSC. No videos. No testimonials.

The credit union didn’t even try to share the potential GAP given my loan amount, down payment, and the vehicle price. Ok, so I’m in the industry, but I never ran the numbers…how much hope does that leave for the average borrower?

Lost opportunities because their contactless closing didn’t truly serve the member.

Get Some Face(Time)

Woman Video Chatting on Laptop

You know that face-to-face is the best way to present, explain, and offer all of your protection products. Obviously, COVID-19 accelerated the transition away from that medium. Thus, it’s up to all of us to create new ways to get that face time.

Zoom (or even Skype and FaceTime) is good. Unless you’re Zoomed out already, it’s a step up from email, but not quite in-person. Introduce the idea of a video chat in your loan process communications, then set an appointment for closing.

There, the FSR can walk the member through your process (screen sharing is even possible to connect further). If a video call isn’t agreeable, that’s fine (it’s going to be the case with some people). In case you weren’t aware, iPhones are still also phones. Wild, right?

Use this time to have a real conversation on why GAP and Depreciation Coverage could matter for them. How you make the offer is critical. This is where that great training comes in, with scripts and even intonation. Here’s a starting point:

“As a member of ABC CU, you have various options surrounding this loan. It’s my responsibility to ensure that you know your risks and how these options can reduce or eliminate these risks. Does that make sense to you?”

Once again, it’s much easier to present your products if the member already knows they exist. Ask if they’ve watched your awesome videos (you do have them, right?). Link to them in the meeting invite. Then learn their specific pain points and benefits for explanation.

Sales Tip: Members are people. People love getting a great deal. They also don’t like paying more. Thus, they’re payment conscious. Adding services means more money, and that’s not welcome. So consider extending the loan term if able to keep payments the same.

This can play a critical role in your sales penetration and product retention.

Read how Cause-Marketing Can Drive Millions in Auto Loans (While Creating $$ for Your Favorite Charity)!

Cause Marketing Case Study Cover

Step 5: Post Sale, or, Avoiding Buyer’s Remorse

Man Excitedly Staring at Computer
Ensure this is a happy “what?!” and not an “I’m canceling it all!”, “what?!”

Loan booked? We’re done! Let’s go home…oh, wait, we are home. And the job still isn’t done?

Have you ever experienced “buyer’s remorse”? You know the feeling…that purchase which felt so right at the time just doesn’t anymore. It can happen after loan closing, especially if a member reflects on the effect their GAP and Depreciation have on their monthly payment.

Most plans are refundable (state specific), so members can change their mind. In the first 30-90 days, borrowers can get a “free look”. After explaining and selling these protection products, it would be a shame to have them ask for a refund two weeks later.

Avoid this scenario by performing a Post Sale. This is a way to prevent buyer’s remorse while also ensuring everything is working as expected.

Reach out to your member a few days after closing, thanking them for doing business with your credit union. Take the opportunity to review their loan, reinforcing the benefits of their great rate and chosen protection products.

A good follow-up also helps build trust and loyalty, setting the stage to capture more wallet share. Yes, this is a perfect time to suggest a full financial review, so you can share other ways to save them money or simplify their banking.

Member Protection Is Your Constant

As Bob Dylan said, times are a’changing. It’s just a matter of degree. COVID-19 accelerated a digital transformation already in progress. Yet your mission of protecting members remains constant.

Working within different bounds, you can continue to help members. By following the above steps, your institution can cover more borrowers with GAP and Depreciation Coverage production.

In so doing, you reduce member and institution risk. Plus, your institution generates increased revenues while decreasing the likelihood of delinquency or repossession. And Depreciation Coverage can be used as a loyalty benefit.

Stick around the Learning Library (or just Subscribe!) to get each section of this “5 Must-Do Steps to Protecting Your Members” series. We’ll work through all your auto loan protection products, with one eye to the member and the other on your continued success.

Joe Winn - CU Geek

Blogger. Speaker. Part-time Jedi.

Focused on helping your bank or credit union grow in the face of emerging challenges.