# GAP insurance - think I was taken



## pmp23 (Sep 26, 2008)

Hi,
Bought a 2016 435i with 3k miles a couple days ago. Out the door price was about 53000. Put 30k cash down, financed the rest. Was offered 1.9%, then the finance woman said she could give me an APR of 0% if I got GAP insurance for $2000. She claimed the payment would be the same and I would be getting GAP for free.

I'm looking at a loan calc, now, and what she said is not true given my down payment. This ends up costing me about $1300 over the course of the loan.

What's the best way to get out of this mess? It's left a bad taste in my mouth -- hope the dealer will take care of it. Thanks!


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## chloe92us (Apr 4, 2016)

Yep, you were taken. Putting that much down, you will never need gap coverage. And you can buy it for $499 through most outside finance companies. I would make a huge stink, and call the finance manager, and threaten to refinance (they won't get their "spiff" if you refinance right away I have been told). If they mess around, just refinance! You could probably get close to the original 1.9% at PenFed. It's crap like this that makes car dealerships look so bad.

https://www.penfed.org/refinance-auto-loan/


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## SARAFIL (Feb 19, 2003)

pmp23 said:


> Hi,
> 
> Bought a 2016 435i with 3k miles a couple days ago. Out the door price was about 53000. Put 30k cash down, financed the rest. Was offered 1.9%, then the finance woman said she could give me an APR of 0% if I got GAP insurance for $2000. She claimed the payment would be the same and I would be getting GAP for free.
> 
> ...


Read the terms of your gap insurance to see if you can cancel it. You might be able to cancel for a certain number of days. It also might be cancellable if you pay off the loan, so you could just refinance the car.


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## Michael @ BMW Seattle (Mar 5, 2016)

chloe92us said:


> Yep, you were taken. Putting that much down, you will never need gap coverage. And you can buy it for $499 through most outside finance companies. I would make a huge stink, and call the finance manager, and threaten to refinance (they won't get their "spiff" if you refinance right away I have been told). If they mess around, just refinance! You could probably get close to the original 1.9% at PenFed. It's crap like this that makes car dealerships look so bad.
> 
> https://www.penfed.org/refinance-auto-loan/


Don't re-finance. First check the Gap contract for cancellation terms. If you can cancel it without penalty (and in most cases you won't have one in the first 30 days,) then you get a 0% loan and no Gap, as you don't need it.

The pro-rated balance will come off the end of the loan. It effectively reduces the loan term.

Check the contract.

~M~


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## chloe92us (Apr 4, 2016)

Michael @ BMW Seattle said:


> Don't re-finance. First check the Gap contract for cancellation terms. If you can cancel it without penalty (and in most cases you won't have one in the first 30 days,) then you get a 0% loan and no Gap, as you don't need it.


Well this would be ideal....I hope it works!


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## Ninong (May 20, 2014)

Michael @ BMW Seattle said:


> Don't re-finance. First check the Gap contract for cancellation terms. If you can cancel it without penalty (and in most cases you won't have one in the first 30 days,) then you get a 0% loan and no Gap, as you don't need it.
> 
> The pro-rated balance will come off the end of the loan. It effectively reduces the loan term.
> 
> ...


+1

Unless the law has changed since I worked there, you will get a full refund for cancellation within the first 30 days. The refund is applied as a payment against the principal of your loan but your monthly payments remain the same. It does affect the total amount of money you owe on the loan, lowering the total amount of interest you owe on it, resulting in the loan being paid off sooner than scheduled.

The GAP insurance policy will have a cancellation notice informing you of your rights. Good luck!


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## Ninong (May 20, 2014)

One more point. Don't pay any attention to what she told you or what she may tell you now. Ignore all of that and just follow the cancellation instructions exactly as stated on the GAP insurance policy.

It is absolutely obscene to charge anyone that amount of money for GAP insurance on a retail loan when they had a $30,000 down payment. My apologies. And you are free to tell her we said that!


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## namelessman (Dec 23, 2004)

Michael @ BMW Seattle said:


> Don't re-finance. First check the Gap contract for cancellation terms. If you can cancel it without penalty (and in most cases you won't have one in the first 30 days,) then you get a *0% loan* and no Gap, as you don't need it.
> 
> The* pro-rated balance* will come off the end of the loan. It effectively reduces the loan term.
> 
> ...


Will F&I still honor 0% if the gap insurance is removed?

Just say the original loan is 4-year, so [email protected]% is about $750 of interest. So the pro-rated balance will be $2000 - $750 = $1250?


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## Ninong (May 20, 2014)

namelessman said:


> Will F&I still honor 0% if the gap insurance is removed?
> 
> Just say the original loan is 4-year, so [email protected]% is about $750 of interest. So the pro-rated balance will be $2000 - $750 = $1250?


They don't have the loan. They sold it to BMWFS. BMWFS is now the lienholder and legal owner of the car and the customer is the registered owner of the car. The dealership is out of the picture altogether. What they chose to do with the APR on the loan is their business. What the customer chooses to do with the GAP insurance is governed by the terms of the policy and in California it's going to have a cancellation option that results in no penalty if cancelled within 30 days. That refund will have to be applied to the outstanding balance on the loan. It's up to the lender how to apply it but BMWFS' policy is to apply it to the principal and leave the payments unchanged. That's the policy of most banks, too.

The customer should comply with the cancellation instructions on the policy and handle everything in writing and not go down to the dealership in person.


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## namelessman (Dec 23, 2004)

Ninong said:


> They don't have the loan. They sold it to BMWFS. BMWFS is now the lienholder and legal owner of the car and the customer is the registered owner of the car. The dealership is out of the picture altogether. What they chose to do with the APR on the loan is their business. What the customer chooses to do with the GAP insurance is governed by the terms of the policy and in California it's going to have a cancellation option that results in no penalty if cancelled within 30 days. That refund will have to be applied to the outstanding balance on the loan. It's up to the lender how to apply it but BMWFS' policy is to apply it to the principal and leave the payments unchanged. That's the policy of most banks, too.
> 
> The customer should comply with the cancellation instructions on the policy and handle everything in writing and not go down to the dealership in person.


This is an interesting strategy, namely, get 0% with GAP and then recoup GAP cost per cancellation policy. Will BMWFS buy a 0% loan without the corresponding GAP? If GAP is cancelled with zero penalty and BMWFS still holds 0% loan, then they will lose money on the deal.

This is similar to signing up for BMWFS finance to claim BMWFS incentives and then pay off the next month. A few CA's/SM's say they will be charged back by BMWFS if the contract is terminated within 3-6 months, so sooner or later the loophole will be plugged(if not so already).


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## jjrandorin (May 8, 2013)

namelessman said:


> This is an interesting strategy, namely, get 0% with GAP and then recoup GAP cost per cancellation policy. Will BMWFS buy a 0% loan without the corresponding GAP? If GAP is cancelled with zero penalty and BMWFS still holds 0% loan, then they will lose money on the deal.
> 
> This is similar to signing up for BMWFS finance to claim BMWFS incentives and then pay off the next month. A few CA's/SM's say they will be charged back by BMWFS if the contract is terminated within 3-6 months, so sooner or later the loophole will be plugged(if not so already).


@Namelessman
It might be better for you to contact Ninong directly via PM to discuss those particular questions / scenerios... just my opinion.

@OP, looks like you got some great advice on the gap insurance which was:

1. Do NOT go down to the dealership, or contact the dealership in any way to speak to them about cancelling the gap insurance.

2. Instead, follow the cancellation instructions on your gap insurance policy, which should be able to be cancelled in the first 30 days with no penalty.

3. Do not expect this to change your monthly payment, as the amount of the gap insurance should come off the back of your loan, reducing your total amount due (number of payments), NOT your monthly payment.

4. You should have never paid gap insurance on a loan with a 30K down payment. Unless you drive 50K miles a year, there is no way you would have a gap that large between what you owe on the car, and what it is worth. The more money you put down, the less you need gap insurance. With that much money there is no way you could drive enough to have to worry about the gap between what you owe and what its worth.

NOTE: If you talk to the dealership in any way, they will do everything in their power to attempt to change your mind, or tell you something about changed payments, etc. They would want you to sign new documents, or tell you that your insurance rate does not qualify, etc...

This is why Ninong is giving you the advice of not dealing with them... should not be necessary because the loan should be assigned to BMW FS (or whoever else they assigned it to if not them).

Dealing with the dealership will just complicate things on this, and they have already proven to be untrustworthy for selling you gap insurance when you ABSOLUTELY did not need it with that large of a down payment.

There are times when gap insurance is something you should have (like a loan where you do not put much money down for example.. the dealer is right that you should have gap insurance in that case. Nothing wrong in that particular instance with making it easy to purchase from them)... but THiS case is just them trying to make some extra money.


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## Shon528 (Oct 3, 2003)

No offense to the OP, but she was able to sell GAP insurance to someone w/ a $30k down payment on a $50k car? They probably recorded that conversation and using it in their training module "How to sell water to a whale". All kidding aside, my experience has been as Ninong stated, any add-ons purchased in the finance office, then later cancelled, would not change the payments. I saw on a loan where a refund was applied as a payment towards the principal. And then once on a MBFS lease, I cancelled the 3rd party tire and wheel warranty and I received a check for the pro-rated amount. In both cases, my payments stayed the same.


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## Michael @ BMW Seattle (Mar 5, 2016)

0% is the current buy rate for fs loans for retired service loaners. The Gap offer was at minimum unethical and potentially illegal maneuver. The rate almost never is dependent upon the purchase of a protection product.

In my years of doing F&I, I've had only a handful of times the lender has required gap insurance. Usually high risk client with low % down. 

And it wasn't for the rate, it was for them to buy the contract at all.


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## namelessman (Dec 23, 2004)

Michael @ BMW Seattle said:


> 0% is the current buy rate for fs loans for retired service loaners. The Gap offer was at minimum unethical and potentially illegal maneuver. The rate almost never is dependent upon the purchase of a protection product.
> 
> In my years of doing F&I, I've had only a handful of times the lender has required gap insurance. Usually high risk client with low % down.
> 
> And it wasn't for the rate, it was for them to buy the contract at all.


If OP is low risk/good credit then it will mean the original 1.9% offer is problematic given current BMWFS buy rate is 0%. Can F&I markup 1.9% above BMWFS offering?


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> If OP is low risk/good credit then it will mean the original 1.9% offer is problematic given current BMWFS buy rate is 0%. Can F&I markup 1.9% above BMWFS offering?


There's no need to worry about the rate changing ... the OP just needs to cancel gap directly.


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> This is an interesting strategy, namely, get 0% with GAP and then recoup GAP cost per cancellation policy. Will BMWFS buy a 0% loan without the corresponding GAP? If GAP is cancelled with zero penalty and BMWFS still holds 0% loan, then they will lose money on the deal.
> 
> This is similar to signing up for BMWFS finance to claim BMWFS incentives and then pay off the next month. A few CA's/SM's say they will be charged back by BMWFS if the contract is terminated within 3-6 months, so sooner or later the loophole will be plugged(if not so already).


Again, no need to worry about the strategy. This situation is not like BMWFS'S payment credit programs that could charge the customer for credits if they don't maintain their finance contract.

And there are possibilities of charge backs for every contract and policy ... it's an inherent risk in the business.

The F&I person rolled the dice on this one and will lose out once the OP cancels the contract.

M


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## Ninong (May 20, 2014)

namelessman said:


> This is an interesting strategy, namely, get 0% with GAP and then recoup GAP cost per cancellation policy. Will BMWFS buy a 0% loan without the corresponding GAP? If GAP is cancelled with zero penalty and BMWFS still holds 0% loan, then they will lose money on the deal.


In this case BMWFS loses nothing because 0.0% APR is the current special offer on a demo and 0.9% APR is the current rate on a CPO. In the very rare event that a dealer should assign a contract at an APR lower than BMWFS' current buy rate, then BMWFS would short the funding one way or another based on whatever their current policy is for handling that. I'm sure Michael-of-Seattle knows the specifics on that but they could either do a finance reserve charge-back to the dealer's reserve account (which I think would be the more appropriate way to handle it) or they could simply short the amount they pay the dealer. I don't think the specifics really matter for this conversation but I hope that answers your question.



> This is similar to signing up for BMWFS finance to claim BMWFS incentives and then pay off the next month. A few CA's/SM's say they will be charged back by BMWFS if the contract is terminated within 3-6 months, so sooner or later the loophole will be plugged(if not so already).


Just remember what they're saying when they say they will be "charged back" by BMWFS if the customer doesn't keep the contract open the required minimum number of months. What they usually mean is that whatever flat payment in lieu of reserve that BMWFS may have paid them will be charged back against their reserve account. For example, let's say BMWFS paid them $150 or maybe $250 as a flat payment in lieu of earned reserve on a particular finance contract. It usually has to remain on the books for a certain minimum amount of time or else that payment (call it a "commission" if you like) with be charged back (deducted) from the dealer's reserve account. By the way, every contract that doesn't go the distance results in a charge back for the unearned reserve anyway. If they write a contract for a 60-month loan but the customer trades it in after only two years (or whenever), then just like the customer didn't owe interest for the full 60 months the dealer didn't earn his share (reserve) for the full 60 months either. So the amount that he was overpaid is deducted from his account.

Sometimes the dealer will write the contract at the advertised rate -- mostly because he sort of has to -- and BMWFS pays him what we might consider a "mini commission" of maybe only $150 per contract, or maybe it might be a little more if it's based on the dollar amount of the loan. None of that really matters to you guys if you're getting the same rate you see in the Special Offers on the BMWUSA.com website. Just remember that in most cases the dealer is allowed to mark up those advertised APR finance rates if he wants to just as he is allowed to mark up the money factor if he wants to even though, as most of us know, BMW uses the base MF when they calculate their special deals, they just don't come right out and say so. In fact, about the only thing you can figure out for certain from their lease disclosures is the reserve percent for 36 months, 10k miles per year, or whatever term is their special offer.

Sometimes I think you guys worry about this stuff too much instead of just shopping for the best deal you can get on a car you like in your local market. You can always find out what you can get from one of the hotshot out-of-state Internet specialists, like a few of the Bimmerfest sponsors who active pursue that business, by just send them an email or simply picking up the phone and calling them. They will be happy to give you a no-nonsense quote and even tell you how much it would cost to have the car trucked to you. Then you can consider that as a possible option. Personally I think it would be much more fun to just go down to your local BMW dealership(s) and annoy some poor salesperson for a while -- assuming you know everything there is to know about the car you want, who has it and exactly what programs are available on it at the time. Just make sure that if anybody gets annoyed, it's them and not you. 



Shon528 said:


> No offense to the OP, but she was able to sell GAP insurance to someone w/ a $30k down payment on a $50k car? They probably recorded that conversation and using it in their training module "How to sell water to a whale".


Most of you will not believe this, but the average buyer is not as informed as most of you. The average buyer may visit two dealerships at the most before closing a deal. Unfortunately for the first dealership, that usually means he bought at the second dealership. All they had to do is have a car he liked and then end up a little lower than the first place. The average customer hates shopping for a car. It's right up there with visiting the dentist.



> All kidding aside, my experience has been as Ninong stated, any add-ons purchased in the finance office, then later cancelled, would not change the payments. I saw on a loan where a refund was applied as a payment towards the principal. And then once on a MBFS lease, I cancelled the 3rd party tire and wheel warranty and I received a check for the pro-rated amount. In both cases, my payments stayed the same.


We can't make general statements about this to everyone who asks because some of those products are not that way and, not only that, but some states have different laws about how that stuff is handled. In the case of the OP, it just so happens that I am very experienced in that local market, although I retired a long time ago.

The refund for anything that is included in the finance contract or lease contract should go to the lienholder, who happens to be the legal owner of the car. All you are is either the registered owner in the case of a loan or the registered lessee in the case of a lease. If it's in the contract, then it was paid for by the bank, not you. If you paid for it, then it wouldn't be in the contract. You would have paid for it by separate check. Sometimes the refund does go to you by mistake but it should go to the bank and then it's entirely up to them how to credit it, as long as they do actually credit it. Most of them apply it to the principal balance (or last payments due on a lease) and leave the monthly payment unchanged. There used to be a time, a long time ago, when quite a few banks applied it to the loan then recalculated the monthly payments, reducing them.



Michael @ BMW Seattle said:


> 0% is the current buy rate for fs loans for retired service loaners. The Gap offer was at minimum unethical and potentially illegal maneuver. The rate almost never is dependent upon the purchase of a protection product.
> 
> In my years of doing F&I, I've had only a handful of times the lender has required gap insurance. Usually high risk client with low % down.
> 
> And it wasn't for the rate, it was for them to buy the contract at all.


+1


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## HAPPY_CHRISSY (Sep 6, 2014)

pmp23 said:


> Hi,
> Bought a 2016 435i with 3k miles a couple days ago. Out the door price was about 53000. Put 30k cash down, financed the rest. Was offered 1.9%, then the finance woman said she could give me an APR of 0% if I got GAP insurance for $2000. She claimed the payment would be the same and I would be getting GAP for free.
> 
> I'm looking at a loan calc, now, and what she said is not true given my down payment. This ends up costing me about $1300 over the course of the loan.
> ...


I got GAP insurance from my credit union for $130, why was yours so much more?


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## Ninong (May 20, 2014)

HAPPY_CHRISSY said:


> I got GAP insurance from my credit union for $130, why was yours so much more?


The OP explained that in the opening post. If you are still confused, I suggest reading some of the responses in this thread.


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## Michael @ BMW Seattle (Mar 5, 2016)

Ninong's post was dead on. :thumbup:

And for those that have that need to know, generally any contract cancellation is a charge back to the Finance department via a ccharge back account. If the dealer makes a mistake on the appropriate rate, the lender will "shortfund" the dealer when they pay the dealer for the ccontract, by the amount of the Dealer's error.

Sometimes we do that on purpose to beat a rate from a lender that we don't work with. That's "buying down the rate. "

Yeah, lots of idiosyncrasies. 

M


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## namelessman (Dec 23, 2004)

Ninong said:


> Just remember what they're saying when they say they will be "charged back" by BMWFS if the customer doesn't keep the contract open the required minimum number of months. What they usually mean is that whatever flat payment in lieu of reserve that BMWFS may have paid them will be charged back against their reserve account. For example, let's say *BMWFS paid them $150 or maybe $250 as a flat payment in lieu of earned reserve on a particular finance contract.* It usually has to remain on the books for a certain minimum amount of time or else that payment (call it a "commission" if you like) with be charged back (deducted) from the dealer's reserve account. By the way, every contract that doesn't go the distance results in a charge back for the unearned reserve anyway. If they write a contract for a 60-month loan but the customer trades it in after only two years (or whenever), then just like the customer didn't owe interest for the full 60 months the dealer didn't earn his share (reserve) for the full 60 months either. So the amount that he was overpaid is deducted from his account.


The $150 to $250 flat rate sounds reasonable, although festers reported that some CAs/SMs became crazy when customers paid off their BMWFS finance the next month after capturing the BMWFS finance incentives, e.g. $1k royalty credit, and $1k to $3k holiday credits. The CAs/SMs complained that they lost several $k, and requested customers to pay back the incentives to the dealers. If in fact the charge back is only $150 to $250 as you described, it will be horrible when some unsuspected customers do folk over $1k(e.g.) back to the dealer.


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## namelessman (Dec 23, 2004)

Michael @ BMW Seattle said:


> Again, no need to worry about the strategy. This situation is not like BMWFS'S payment credit programs that could charge the customer for credits if they don't maintain their finance contract.
> 
> And there are possibilities of charge backs for every contract and policy ... it's an inherent risk in the business.
> 
> ...


The F&I did more than rolling the dice by starting off with 1.9% if OP did qualify for 0% buy rate.

Having said that, if O did not qualify lower than 1.9%, then F&I did get OP the most favorable 0% buy rate, with string attached(i.e. $2k GAP). Once the GAP is unrolled(presumably at zero cost), OP will be ahead without having to pay 1.9%.


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## pmp23 (Sep 26, 2008)

HAHAHA, thanks everyone for the sound advice. Prior to receiving any replies, I contacted the finance person, and she offered to re-write the loan. I am going to ask that they honor 0% and remove the gap insurance.

I will let you know how this turns out.


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> The $150 to $250 flat rate sounds reasonable, although festers reported that some CAs/SMs became crazy when customers paid off their BMWFS finance the next month after capturing the BMWFS finance incentives, e.g. $1k royalty credit, and $1k to $3k holiday credits. The CAs/SMs complained that they lost several $k, and requested customers to pay back the incentives to the dealers. If in fact the charge back is only $150 to $250 as you described, it will be horrible when some unsuspected customers do folk over $1k(e.g.) back to the dealer.


Any CA or SM who goes "crazy" and actually asks the client for the charge back needs to be kicked in the pants.

First, very few states have lending laws that *don't* allow a finance contract to be cancelled without a penalty. Any dealer who tells or implies that the contract must be in place for six months is ethically bankrupt and legally wrong. It's the inherent risk of the business. In my personal experience, you have very few charge backs if you are ethical and full disclosure.

Second, and more importantly, very few programs in the past couple years have tied a contract to a benefit that could cause a chargeback. For example, the current purchase credit isn't tied to any financing. Rebates and lease cash are upfront cash, so can't be charged back to the dealer. And option allowances are discounts to the car.

So don't worry that the dealer will come after you if you pay off your loan or refinance in 3 months. If they do, don't go back.

Gives us all a bad rep.

M


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## Ninong (May 20, 2014)

pmp23 said:


> HAHAHA, thanks everyone for the sound advice. Prior to receiving any replies, I contacted the finance person, and she offered to re-write the loan. I am going to ask that they honor 0% and remove the gap insurance.
> 
> I will let you know how this turns out.


Your contract was written at 0%, correct? Why do you need to "ask that they honor 0% and remove the gap insurance?" You already have 0%. You can remove the gap insurance yourself by canceling it. The refund will be a credit against you loan balance.

You have a signed copy of your finance contract, correct? You drove off the dealership's premises in your BMW with the California state temporary registration on the windshield, correct? It's a done deal. They can't make you sign a new contract and you're fine with it the way it is right now. There is no need for any further discussions with the nice F&I lady.

Don't go back. Read the cancelation clause on your GAP insurance policy and follow those instructions but do it in writing and by mail. Your deal was probably already funded by BMWFS but it really doesn't matter because as long as you have a signed copy of the contract and as long as you were delivered, then it's a completed deal and you have a legally binding document.


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## jjrandorin (May 8, 2013)

pmp23 said:


> HAHAHA, thanks everyone for the sound advice. Prior to receiving any replies, I contacted the finance person, and she offered to re-write the loan. I am going to ask that they honor 0% and remove the gap insurance.
> 
> I will let you know how this turns out.


Please read ninong's last post. If you do go back and sign a new contract, you have the chance of them changing something / re charging something / playing with the numbers. Dont do that.

They took advantage of you, and you dont need to do anything with them to fix it. You have a current CA (Michael, who has done the Finance job as well), and Ninong, who has also done the finance job both suggesting that you not go back there, and just cancel the policy yourself.

Dont give the "nice" Finance person a chance to screw you again.


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## namelessman (Dec 23, 2004)

Michael @ BMW Seattle said:


> Any CA or SM who goes "crazy" and actually asks the client for the charge back needs to be kicked in the pants.
> 
> First, very few states have lending laws that *don't* allow a finance contract to be cancelled without a penalty. Any dealer who tells or implies that the contract must be in place for six months is ethically bankrupt and legally wrong. It's the inherent risk of the business. In my personal experience, you have very few charge backs if you are ethical and full disclosure.
> 
> ...


That's great info, thanks for sharing. For my MY13 purchase the BMWFS $750 loyalty credit was skimmed because of similar "warning" from CA/SM.  A friend in the past did write a check in the amount of incentive($500) to the dealer. 

Most of my friends in similar situations just ignore the CA/SM's complaints and nothing happened.


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## namelessman (Dec 23, 2004)

pmp23 said:


> HAHAHA, thanks everyone for the sound advice. Prior to receiving any replies, I contacted the finance person, and she offered to re-write the loan. I am going to ask that they honor 0% and remove the gap insurance.
> 
> I will let you know how this turns out.


Is the sales contract written such that the 0% is tied to the GAP in black and white?


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## Grubrunner (Jul 13, 2015)

Ninong said:


> Your contract was written at 0%, correct? Why do you need to "ask that they honor 0% and remove the gap insurance?" You already have 0%. You can remove the gap insurance yourself by canceling it. The refund will be a credit against you loan balance.
> 
> You have a signed copy of your finance contract, correct? You drove off the dealership's premises in your BMW with the California state temporary registration on the windshield, correct? It's a done deal. They can't make you sign a new contract and you're fine with it the way it is right now. There is no need for any further discussions with the nice F&I lady.
> 
> Don't go back. Read the cancelation clause on your GAP insurance policy and follow those instructions but do it in writing and by mail. Your deal was probably already funded by BMWFS but it really doesn't matter because as long as you have a signed copy of the contract and as long as you were delivered, then it's a completed deal and you have a legally binding document.


This pretty much nails it.

OP, I think you're looking a little too deep into this. Take the advice above and roll with it. It really isn't as complicated, as you may think, to get this right.

You've been given some top shelf advice in this thread from some astute people who are clearly in the know. Please proceed with it.

Ball's in your court.....


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## Pat_X5 (Aug 23, 2008)

OP since you did not do your homework ahead of time on service loaners & demos at 0% being offered by BMW, why go back into that same dealer that raped you and ask for more ?

I would be appalled - I would give a negative CSI feedback, cancel the GAP, and then let the rapist dealer suffer thru it.!


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> Is the sales contract written such that the 0% is tied to the GAP in black and white?


It can't be tied to it/dependent on it. I'm trying to remember my FS form, and if it discloses the Gap provider or not. Regardless, if the gap policy has a cancellation clause, it won't matter.

In my time in F&I I had a few Gap cancellations, most because the client had it in their auto insurance (or could include it.) Not once did it require a re-contracting.

~M~


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## namelessman (Dec 23, 2004)

Michael @ BMW Seattle said:


> First, very few states have lending laws that *don't* allow a finance contract to be cancelled without a penalty.


The contract may still contain pre-payment clause(s). It is unclear if OP's loan is from BMWFS or 3rd party lender.


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> The contract may still contain pre-payment clause(s). It is unclear if OP's loan is from BMWFS or 3rd party lender.


Pretty sure that 3rd party lenders won't be offering 0%.

And sorry, I wasn't clear, but I meant exactly that ... most states' consumer protection laws don't allow pre-payment penalties on loans.

But yes, always review the contract(s).

In this case, it's pretty easy ... cancel the Gap, OP still keeps the FS loan at 0% but now for a shorter term.

~M~


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## Ninong (May 20, 2014)

Michael @ BMW Seattle said:


> In this case, it's pretty easy ... cancel the Gap, OP still keeps the FS loan at 0% but now for a shorter term.
> 
> ~M~


Exactly, but I wouldn't count on that happening in this case. I don't think we're getting through with the message. I think the OP still intends to do things his/her way and return to the dealership. 

Let me include a link to the 0% APR financing, as offered on the BMWUSA.com official website: http://cpo.bmwusa.com/financing-and-special-offers.htm If the OP insists on returning to the dealership, the only contract he/she should sign should be one written at 0% APR and with the GAP insurance removed, lowering the payments. Nothing else and that would include no changes to the selling price of the car and no new allegedly free goodies thrown in. And this time, please read it before you sign it. It's okay to return to the dealer if that's the contract that is offered. If not, get up and walk out. Period. End of story. You already have a legal contract at 0% APR with $30,000 down on a $53,000 OTD deal. It's approved by BMWFS. It cannot be changed in any way without your consent. You can cancel the totally unnecessary GAP insurance. The dealer can rewrite the contract at 0% APR but without the GAP insurance and apologize for the way you have been treated or you will crucify them on CSI. It's that simple.


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## pmp23 (Sep 26, 2008)

*Received a new contract in the mail*

Hi -- so, I received a new contract in the mail with GAP removed and 1.9% rate.

Thanks for the link to financing offers, but I did not see anything about 0% (maybe this is a promotion that ended 5/31?). I had looked at the bmwfs offers prior to buying the car, and I didn't see it at that time, either. Also, I was told this was not a service loaner or demo (and the "used vehicle disclosure" form should have indicated so), so if there was a promo for those, I'm not sure I would have qualified anyway.

Second thing: I do not have any paperwork explaining the terms of GAP cancellation, so it makes me nervous to follow the obviously sage advice earlier in this thread. Would it be normal for this contract to come in the mail, later?

I don't see anything on the contract that indicates the rate is tied to GAP insurance.

I know it kills some of you to think I might sign the new contract at 1.9%, but I'm considering doing so since I don't know the terms of GAP cancellation.


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## Michael @ BMW Seattle (Mar 5, 2016)

if you PM me your VIN I can look to see if it was a loaner.

There's no good F&I person who wouldn't provide a copy of gap policy. And if they said you could get 0% then you could still.

I understand that the amount of interest isn't that much. And you might just want to put it behind you. But remember... you asked us. 

It's this type of stuff that gives the car business a bad rep.

uggh.

M



pmp23 said:


> Hi -- so, I received a new contract in the mail with GAP removed and 1.9% rate.
> 
> Thanks for the link to financing offers, but I did not see anything about 0% (maybe this is a promotion that ended 5/31?). I had looked at the bmwfs offers prior to buying the car, and I didn't see it at that time, either. Also, I was told this was not a service loaner or demo (and the "used vehicle disclosure" form should have indicated so), so if there was a promo for those, I'm not sure I would have qualified anyway.
> 
> ...


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## Ninong (May 20, 2014)

Let me summarize a few points about this discussion.

(1) The contract you signed when you took delivery of the car is valid. You have a signed copy of it. Therefore it is a legally enforceable contract.

(2) In the event you were to agree to sign a new contract, it must be dated with the same date as the first one because that is the date you took delivery. It is the date the car was registered in your name with the state of California. It is the date you took ownership of the car and the date the car's coverage started on your insurance policy.

(3) Therefore, your contract would be governed by BMWFS' program that was in effect on that date in May when you drove off the dealer's premises with that temporary registration on the windshield. If they did send you a new contract in the mail to sign, I assume it has the same date as the previous one, right?

(4) You bought a new 2016 435i with 3,000 miles. This was a service loaner or a dealer demo or a factory exec car, right? If you are confused about that, then just look at the temporary registration on your car's windshield.

(5) The link I gave you did show the 0.0% APR financing rate for demos when I linked it but maybe they decided to remove that line. It doesn't matter. Would you like to know why? Because not only was the 0.0% APR rate in effect on the date in May when you bought this car but it is still in effect all through June until June 30th. It doesn't have to show on their website. It is still in effect!

(6) Are saying you do not have a copy of the GAP insurance policy? I would tell you to call the dealership and ask them to send it to you but they might sell you something else while you're on the phone. Just call BMW Financial Services tomorrow. Tell them your name and tell them you're calling to cancel the GAP insurance on your loan. If they tell you to talk to the dealership, tell them you want to verify your account number with them.

You should probably avoid talking to the dealership. I'm afraid if you call them to ask for a copy of the GAP insurance policy they might sell you something else while you're on the phone. Canceling the GAP insurance policy is not a problem. Them selling GAP insurance on a retail contract with more than 50% cash down is a problem for them.


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## Ninong (May 20, 2014)

pmp23 said:


> Also, I was told this was not a service loaner or demo (and the "used vehicle disclosure" form should have indicated so), so if there was a promo for those, I'm not sure I would have qualified anyway.


So it was a regular used car? It was a Used 2016 435i with 3,000 miles? I guess that's possible. It could be a repo, voluntary or otherwise.

In any event, the temporary registration on your windshield will tell you if it is a new car or a used car. Just check your temporary registration. What does it say? Does it say Used Car? In order for this to be a real used car it had to be registered on a Used Car Report of Sale. If it was registered on a New Car Report of Sale, then it's not a real used car, it's a dealer demo, or service loaner or factory brass hate of some sort.

You're right, the 0.0% APR financing applied to service loaners, demos and factory exec cars, not regular used cars. No worries! They gave you 0.0% APR financing, so now you have it. Hooray! So much the better.

Now all you have to do is get in touch with BMWFS to verify that they have your account by now. They should but that doesn't matter either because you have a valid contract as long as you have your copy and it is fully signed by you and the dealer's representative. Don't sweat it.

P.S. -- Obviously you were entitled to a copy of everything you purchased, including a copy of all insurance that was included in the loan, at the time of delivery.

Wait another week or so and then cancel the GAP insurance. You don't even need a copy of it to do that. They can't stop you from canceling it. It's not a requirement of the loan.


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## jjrandorin (May 8, 2013)

pmp23 said:


> Hi -- so, I received a new contract in the mail with GAP removed and 1.9% rate.
> 
> Thanks for the link to financing offers, but I did not see anything about 0% (maybe this is a promotion that ended 5/31?). I had looked at the bmwfs offers prior to buying the car, and I didn't see it at that time, either. Also, I was told this was not a service loaner or demo (and the "used vehicle disclosure" form should have indicated so), so if there was a promo for those, I'm not sure I would have qualified anyway.
> 
> ...


This dealer should be avoided at all costs. you should not be signing the "new" contract. That "new" contract is the reason you were advised not to talk to the dealer again, as they obviously did something unethical (selling you gap insurance with that large a down payment).

Ignore whatever they sent you in the mail and cancel the gap with BMW FS. They will probably call you to get you to come back in and sign that new contract. dont do it. Your contract has 0% financing, and if thats not available for your loan, well its on the contract so it just means that the dealer will have to pay to buy the rate down themselves which they dont want to do.

Normally, I am all for working with a dealer, but they tried to run a game on you (and I agree with Michael that this is why people hate buying cars / dealing with car dealerships... this goes on all the time at dealerships... you just dont expect it at a BMW dealer but it happens)).

Of course, if you want to just reward the dealer by paying more money after they basically tried to sell you something completely unethical, go for it.

EDIT: I realize my last sentence sounds aggressive, so I will apologize for that. Im just frustrated that even luxury dealers do this kind of thing... I was not meaning to take a shot at OP.. just REALLY hoping OP does not sign the new contract and just cancels the gap insurance.


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## Ninong (May 20, 2014)

pmp23 said:


> I do not have any paperwork explaining the terms of GAP cancellation, so it makes me nervous to follow the obviously sage advice earlier in this thread. Would it be normal for this contract to come in the mail, later?


You should have been given a copy of everything you signed at the time. Everything you agreed to purchase should have been fully disclosed to you before you agreed to purchase that item. Full disclosure applies to included items such as a service contract, an insurance product, a debt cancellation agreement ("gap" insurance), a theft deterrent device, a surface protection product, etc.

Your primary obligation was to read the contract before you signed it. There is a notice above your signature telling you exactly that -- read it fully before you sign it, don't sign it if it contains blanks, etc. If you did not agree to pay $1,300 for "gap" insurance, you should have asked that it be removed. By signing the contract both you and the dealership -- represented by the manager who signed the contract -- agreed to all the terms of the contract.

You should always read a legal document before signing it and ask questions about anything you don't fully understand.



> I don't see anything on the contract that indicates the rate is tied to GAP insurance.


The rate was not tied to the "gap" insurance. If the car was a demo, service loaner or factory car of some kind, then BMWFS offered a promotional rate of 0.0% APR. That is the rate the dealer gave you and the reason we all thought it must be a demo. If it is not a demo, the rate could have been a little higher. However, it is legal for the dealership to mark up the rate by whatever amount allowed by BMWFS at the time. That is discretionary on the part of the dealership but never forget that it requires your full consent. Everything you sign requires your full consent. By signing it, you give that consent and certify that you have read the document you are signing and agree to every word on it.



> I know it kills some of you to think I might sign the new contract at 1.9%, but I'm considering doing so since I don't know the terms of GAP cancellation.


No, but it's frustrating. It's hard to believe you would agree to pay $1,300 for insurance to cover an event that cannot and will not happen. Your car came to a total of $53,000 altogether and you put $30,000 cash down payment, leaving a balance of only $23,000. Your down payment was 57% of the total amount of the purchase. You are required by the terms of the contract to maintain car insurance on the car. If you were to have an accident tomorrow, your car insurance would pay more than $23,000 for the total value of the car. There is no way it would be anything less than that, therefore there would be no "gap" left uncovered.

There is no need for you to sign a new contract. Keep the one you already have and just cancel the "gap" insurance. Send a letter to the dealership informing them that they "forgot" to provide you with a copy of the "gap" insurance policy at the time of delivery and that you need a copy because you intend to exercise your right under California law to cancel it for a full refund and have that refund applied to the balance of your loan with BMW Financial Services. Send a copy to BMW Financial Services just to annoy the F&I person who put that in your contract. Be sure to identify the car by VIN and include your full name and address in your letter to make sure BMWFS can locate your account. You will still have to handle the cancellation through the dealership but that's not a problem.


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