During the current California Legislative session, the Independent Automobile Dealers Association of California (IADAC) has been hard at work on several proposed bills in both the California Assembly and California Senate. Notably, AB-2311 Motor Vehicle Conditional Sale Contracts: Guaranteed Asset Protection (GAP) Waivers as proposed by Assembly Member Brian Mainschein (D-77; San Diego) and supported by California Attorney General Rob Bonta, would place significant limits on GAP protection dealers can offer to their customers.
As it’s currently worded, AB-2311 would strictly limit the amount charged for GAP to 2.00% of the amount financed under a conditional sales contract and prevent dealers from offering a customer the option to purchase GAP if the conditional sales contract’s loan to value ratio or amount financed at the contracting date exceeds certain formulas. The bill would also void the GAP protection and provide the customer a refund of GAP charges, plus the finance charges attributable to the GAP protection, if a dealership employee makes an error. The buyer may also be able to recover three times the amount of any GAP charges as a penalty. AB-2311 would also require disclosure warnings during the sales contracting process. With guidance provided by Brett Scott, NIADA Vice President of Government Affairs, IADAC has been working with CNCDA (California New Car Dealers Association), GAPA (Guaranteed Asset Protection Alliance), APCIA (American Property Casualty Insurance Association) and CCIA (Consumer Credit Industry Association) in an effort to propose amendments to the author of AB-2311 so the consumer remains covered and protected from potential significant and certain financial calamity should they experience a total loss of their vehicle.
You can track AB-2311 on the California Legislative Information website here: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB2311