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Nissan Motor Acceptance Refunds of Unearned GAP Waiver Fees Class Action

When a car is totaled or stolen, the insurance payout may not be enough to cover the amount the person still owes on the auto loan. The difference between the payout and the amount of the loan is called the “gap.” Consumers can cover this gap by buying Guaranteed Asset Protection (GAP) products. This class action alleges that Nissan Motor Acceptance Company, LLC does not refund GAP coverage amounts when auto loans are paid off early.

The class for this action is all persons who, during the applicable statute of limitations period, entered into finance agreements with GAP Waiver Addendums assigned to Nissan Motor and paid off their finance agreements before the end of the term of the loan, but who did not receive a refund of the unearned GAP fees.

In general, consumers can choose from two GAP arrangements. The first is GAP insurance, which is provided by an insurance company. If a total loss occurs and the regular insurance payout doesn’t cover the full payoff amount of the auto loan, the GAP insurance covers the remainder. This is not the type of GAP coverage at issue in this case.

The other type of GAP product is a GAP waiver, which is a kind of debt cancellation agreement. They come not from an insurance company but from the lender. The lender agrees that, if the vehicle is totaled and the insurance payout does not cover the remainder of the auto loan, it will write off the gap amount. GAP waivers let the auto industry provide coverage for the gap without taking on the regulatory and licensing requirements of insurance companies.

The consumer and the vehicle seller execute a GAP Waiver Addendum or form. The complaint describes the arrangement this way: “These GAP fees are included as a separate line item in the vehicle purchase finance agreement and are incrementally paid in monthly installments by the consumer over the life of the loan, with interest, along with the rest of the purchase price of the vehicle.”

Once the loan has been paid off in full, however, there can no longer be a gap, because there is no longer any loan.

The complaint alleges, “Importantly, Nissan Motor’s GAP Waiver Addendum provides that if the car finance agreement is paid off prior to the end of the full loan term, then the GAP Waiver Addendum will terminate, and then the consumer is entitled to a refund of the unused portion of the GAP Waiver Addendum fees.”

This arrangement “makes sense[,]” the complaint claims, because “consumers should not have to pay for a service they no longer need and derive no benefit from.” But the complaint alleges that, when auto loans are paid off early, Nissan Motor does not refund the remaining fees for the GAP Waiver.

Article Type: Lawsuit
Topic: Contract

Most Recent Case Event

Nissan Motor Acceptance Refunds of Unused GAP Waiver Fees Complaint

December 10, 2021

When a car is totaled or stolen, the insurance payout may not be enough to cover the amount the person still owes on the auto loan. The difference between the payout and the amount of the loan is called the “gap.” Consumers can cover this gap by buying Guaranteed Asset Protection (GAP) products. This class action alleges that Nissan Motor Acceptance Company, LLC does not refund GAP coverage amounts when auto loans are paid off early.

Nissan Motor Acceptance Refunds of Unused GAP Waiver Fees Complaint

Case Event History

Nissan Motor Acceptance Refunds of Unused GAP Waiver Fees Complaint

December 10, 2021

When a car is totaled or stolen, the insurance payout may not be enough to cover the amount the person still owes on the auto loan. The difference between the payout and the amount of the loan is called the “gap.” Consumers can cover this gap by buying Guaranteed Asset Protection (GAP) products. This class action alleges that Nissan Motor Acceptance Company, LLC does not refund GAP coverage amounts when auto loans are paid off early.

Nissan Motor Acceptance Refunds of Unused GAP Waiver Fees Complaint
Tags: Breach of Contract, GAP Coverage, Loan-Related Unfair Practices, Unjust Enrichment