Legislative Alert: Department of Defense Withdraws Interpretation on Offering GAP to Members of the Military
All motor vehicle dealerships can again offer Guaranteed Asset Protection (GAP) to service members and their families as they do with civilian customers who finance a vehicle purchase.
The U.S. Department of Defense has granted a joint petition to withdraw Question and Answer (Q&A) 2 from a December 2017 Interpretive Rule that sought to define the scope of the vehicle and personal property financing exclusion to the Military Lending Act (MLA).
The petition was filed by NADA, the American Financial Services Association and supported by RVDA. The issue is also a top priority for the Voluntary Protection Products Coalition, which includes RVDA.
The associations explained that Q&A 2 interpreted the MLA in a way that effectively prevented dealers from making GAP waiver coverage available to service members, who previously were able to voluntarily purchase GAP to protect against the personal financial risk that arises when a vehicle is declared a total loss.
Motor vehicle and financial services trade groups argued that the interpretation exposed service members to significant liability by effectively eliminating their ability to adequately protect themselves from incurring financial losses in the event of the total loss of a vehicle.
RVDA will provide more details on this issue as they become available.