I was fortunate to enjoy a short vacation on the Gulf Coast last week. It was an enjoyable trip with the family. One glaring side effect of vacation travel these days is the high fuel expense of making that drive down the road. We spent roughly $140 just on fuel costs alone during the trip. These high fuel prices are creating a significant decrease in the value of trucks, SUV's, and other vehicles that typically achieve lower fuel mileage. If you own one of these vehicles and have the vehicle financed, chances are you owe more on the loan balance that what the vehicle is worth. Automobile dealers are having a difficult time selling trucks and larger SUV's so the market prices on these vehicles have dropped as a result. This can create a "negative equity" situation that makes trading in your vehicle more difficult if the amount of the "negative equity" is too large. Contact one of our Loan Officers for the current Trade-in and Retail values of your used automobile if you are considering a vehicle trade.
The decreasing values of trucks and SUV's can also cause a problem in an insurance total loss claim. Insurance companies typically will pay a total loss claim based upon the market value of the vehicle. If you owe more than what the vehicle is worth, you are responsible for paying the remaining balance. North Alabama Educators Credit Union does offer a GAP Protection Plan in the amount of $195 that will payoff any remaining balance on a loan if the insurance company does not payoff the loan in full. (Dealers sell this coverage for $300-$500 by the way). We have seen remaining loan balances of $3,000 & more paid by the GAP Protection Plan coverage. The GAP Protection Plan is available on new loans or existing loans with the credit union. If you think that you have a "negative equity" situation on your current vehicle financed and you do not have the GAP Protection Plan, it can be purchased at any time prior to any damage claims. Again, contact a Loan officer for assistance to determine if the GAP Protection Plan would be beneficial or not. We can show the current value situation and projected depreciation values over the remaining life of the loan.