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NJ Lease: cancel dealer GAP and use insurer's GAP insurance?

I negotiated a lease Friday night on a 2016 Toyota RAV4 LE, initial agreed lease price was $267 on the T&R paperwork I signed that night. Returned Saturday to turn in old car and finish. By the time I left 4 hours later it had been raised to $310. New to leasing, thinking I made a couple of mistakes. (Duh.)

  1. I went to the dealer Saturday after my auto insurance company had closed.
  2. I knew what GAP insurance was and was prepared to discuss it.
  3. Late in the process the dealership Finance & Insurance agent had presented me with a “GAP Insurance” menu of four columns.
  4. Left column had the most items.
  5. Each column had fewer options as you go from left to right.
  6. Turns out those other items were additional perk/services having nothing to do with GAP.
  7. Cheapest column was $343.
  8. Negotiated him down to $310.
  9. His concession was to “throw in for free” / “Include” a couple of items from the other more expensive columns: a damaged tire replacement and third year maintenance.

I am paying an additional $43/month. When I called my insurer today (Monday), their GAP insurance is only $40/year.
During the negotiation, I had asked several times whether I can cancel the dealer GAP if I get my own. At first he avoided saying yes, pointing out advantages of the dealer version (will give me $2500 toward a replacement vehicle) but eventually said "Yes, but you won’t want to."
So my first question is: Is there any reason I can’t cancel it?

My followup question has to do with those perks. Inspection of the printout lease agreement shows a section “Gross Capitalized Cost Itemization and Other Items” that lists GAP and the two ‘other items’:
GAP is only $325.
Looks like I was charged for the two additional “included free” perks:

  • Prepaid maintenance (332.55)
  • Tire and wheel ($375)

So my second/followup question is: Can I get them to cancel those two additional charges since the F&I agent said he was including them “for free” in the charge that was presented to me as a charge for GAP insurance? I don’t want them if they aren’t free.

On a final note, the process of signing for each item was done in the following manner:
The F&I agent has a screen that I can’t see.
I was handed a digital signature unit that I was to use to sign off on each item.
He went down the list electronically on his screen, causing signature boxes to appear on my unit, but not displaying the full text on what each item was.
I read the brief title of each, asking what each one was and letting him tell/explain.

How common is this experience?
What do you think about it?

There were several reasons I felt I could not walk away on this deal and come back in October (it was the last 2016 LE they had/were going to get, etc) but I feel now I let them get the better of me. I will pay about $1,500 over the three years for the higher amount if I can’t get some/all of it cancelled.

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Seems you were desperate to get that vehicle. think you should have read the paper work you signed. If you couldn’t see the monitor, you should have insisted on a hardcopy or to see the monitor.

First off, the F&I manager will lie to you. Anything they SAY is not binding, only what is in the contract.

For the answers you want; Read the contracts. You should have read it before you signed it but now you need to read it to determine if you can drop the GAP and use another. There is no way anybody on the internet can advise you on the particular laws of your state and the conditions of your contract since you didn’t say where you live and we didn’t read your contracts either.

Well, $1500 is probably cheaper than taking a course in contract negotiation, and you learned the same thing.

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Thanks for the replies. Agreed that I should have done something on this before leaving the dealer. I won’t make that mistake again.

Interestingly, may not turn out to be as bad as I feared.

  1. Initially got conflicting information on gap coverage from my insurer. Stopped into my agent and got the bad news: they don’t offer it in my state (NJ). They do include New Car Equivalent Coverage but that would not pay the gap.

  2. Went back to dealer. Charge for gap is usually $800+. They discounted it to $325 because Toyota had incentives that allowed them to offer lower rate in conjunction with picking two other items.

So…I could have skipped coverage and saved the money, but would have had to shop around to find it as a stand-alone item from a different insurer than my auto insurance.


take the coverage from Toyota and get two other perks included for the same cost that they normally charge for coverage alone. Don’t care about the tire item but do care about the third year maintenance.

I intended to get gap coverage all along, and the dealership told me at the time of purchase that I did not have to purchase it. I spent time researching specifics of leasing agreements in advance but needed to improve the timing on my negotiating.

You mentioned that I should have looked at the contract I was signing. I was there for four hours by the time I was done; never again. Never going on a weekend, never going on a sale weekend, never going on the last day of a special event. Thanks for the advice, will be sure to plan my event and demand to go over each item.

just to close this out…

Despite popular believes, GAP insurance is historically much less expensive when purchased from the same insurance company that insures your car. A car dealer will always try to sell you the most expensive GAP policy because they get at a minimum 50% of the initial premium.

The Toyota web site indicates that GAP coverage is an optional extra cost coverage. Honda and Acura factory leases include it at no charge.

I don’t know if a dealer can increase the GAP price and keep the excess, but I would suspect so. As you said, your insurer charges $40 a year where available. $800 for a Toyota which has lowish depreciation, seems very high and profitable. If you rolled negative equity into the new lease, all bets are off.

We leased a car, have an agent in a brick and mortar building, but help is available 24/7. Our agent told us we have 30 days of coverage to update our policy. I am sure states and companies differ, we got upsold on one item at closing, it was $10 a month that covers minor damage. I have not read through the agreement but led to believe it covers dings, dents scratches scraped wheels, excessive wear and tear we might otherwise be responsible for at the end of the 3 year lease. I don’t recall if other options were declined, but $267 to $310 is quite a jump in payments, better than $343 for sure!

Edit Guess I misunderstood gap insurance, the amount the dealer claims vs what the insurance company pays if you total it? Let them fight it out is my first thought.

The dealer is not involved if Gap Insurance claim is made. Totaled vehicle will have an amount that insurance (yours or other party) pays. If that amount does not cover balance of vehicle loan or lease ending amount Gap Ins. pays the rest.
I consider Gap Ins. on a financed vehicle a piece of mind choice, on a lease I would definitely have it.

Can someone tell me what “Gap Insurance” is ?

Bill-Google is your friend .

Thanks, Kurt and Ben, good stuff. Hearing a quote of 40/year from the phone insurance agent led to such disappointment once she called me back to say they don’t offer it in NJ. Checked around, if a major insurer in New Jersey offered gap insurance I would have taken it, gone back and cancelled the dealer’s gap. I know better now.

Mostly I was really asking you all what your recent experiences were with the F&I process using an electronic screen that is mostly hidden from they buyer’s view. I did see and sign some minor and interim papers , just was wondering about how often people don’t see a display when they sign the final ones.

It is really quite simple, you read what you are signing before you sign it and ask for clarification if you need it. As for the screen the closer is just putting in the info so they can print it.