Important New GAP Rules

For California Auto Financing Contracts

Upcoming Live Webinar

November 8, 2022

10:00 a.m. PST (11 MST, 12 CST, 1 EST)

Does your financial institution finance motor vehicles in California? Do your contracts sometimes include GAP coverage? If so, you need to prepare soon to comply with important new California laws that take effect on January 1, 2023!

The new law directly applies when GAP is financed as part of a motor vehicle financing contract to a California borrower (regardless of where the contract is made), although it may also apply to California contracts involving non-California borrowers or even to non-California contracts to non-California borrowers in some cases. Among other things, the new law —

• Prohibits the sale of GAP under certain circumstances

• Sets a maximum fee that may be charged for GAP

• Requires certain disclosures be given at the time GAP is purchased

• Requires certain information be given to the consumer when the sales contract is sold to a financial institution

• Requires certain information be provided every time an itemized balance is given to the consumer (including in demand letters, payoffs, and notices of sale)

• Provides that GAP coverage automatically terminates when certain events occur

• Puts the burden on the financial institution holding the contract to obtain a refund of the unearned GAP premium whenever coverage terminates (with certain exceptions)

• Places limits on how the GAP refund may be applied or paid

• Imposes record keeping requirements

During this online training program, attorney Eric North will discuss each of these requirements in detail and will outline specific actions financial institutions should take both before buying a contract that includes GAP and during the entire term of the contract. Eric will also discuss how the new law may impact financial institutions that sell their own GAP policies!

This program is intended for everyone who deals with GAP policies, who purchases motor vehicle financing contracts, who collects motor vehicle financing contracts, and who gives itemized balance statements to borrowers under motor vehicle financing contracts.

Register Here!

Speaker: Eric North

Eric North, the primary speaker at the programs listed on this site, has represented the interests of credit unions and other financial institutions as an attorney with respect to litigation, compliance, governance, bankruptcy and collections matters since 1984. Eric has appeared in state and federal courts throughout the State of California, and has argued before the Ninth Circuit Court of Appeal.

Eric is also a nationally recognized speaker on legal issues relating to consumer lending institutions, and has presented hundreds of programs on behalf of national, state and local leagues and associations from around the country.