How Long Does a GAP Refund Take? What to Do If It's Late

No federal law sets a deadline for a GAP refund: your state's law and your GAP agreement decide. A handful of states set one, usually 60 days (see the table below). Elsewhere there is no fixed number of days, so the date of your written request is the date you can point to.

Do not count on the refund arriving by itself. The Consumer Financial Protection Bureau has found auto loan servicers acting unfairly by failing to make sure borrowers received refunds of unearned fees for add-on products after their loans ended early (Supervisory Highlights, Issue 35, Fall 2024), and earlier found servicers not requesting GAP refunds from administrators after repossessions (Issue 26, 2022). Send the request yourself.

• Other rules worth knowing:
• In Texas, cancelling within 30 days, with no total loss or theft, returns the entire fee (Tex. Fin. Code § 354.007(c)). California also gives a full refund within 30 days, plus the finance charges on the GAP (Cal. Civ. Code § 2982.12).
• Wisconsin sets no number of days, but no cancellation fee may be charged, and after 30 days the refund must be at least what the Rule of 78 gives (Wis. Stat. § 218.0148).
• California and Wisconsin ban cancellation fees. Alabama, Connecticut and New Jersey allow up to $50 in some cases.

GAP is usually sold by the dealer, but your GAP agreement or addendum names the company that handles cancellations and refunds: an insurer for GAP insurance, or, for a GAP waiver, the creditor or an administrator acting for it. The agreement also sets out the refund terms.

If your loan is still open, the refund may be credited to your balance instead of paid to you: Alabama, California, Louisiana and New Jersey law all allow that unless the loan is paid in full (after a default or repossession, New Jersey and Louisiana let it go to the lender). When you paid off, refinanced or traded in the car, the loan is paid in full, so ask for the refund to be paid to you.

• Send a written cancellation request to the company named in your GAP agreement and to the dealer, as soon as the loan ends early. Include:
• your name, address and the vehicle's VIN;
• the GAP agreement or contract number and its price (both appear on your retail installment contract);
• the date the loan ended and proof of it: the payoff letter, lien release, or the refinance or trade-in paperwork;
• where the refund should be paid.

Use a method that proves the date, such as certified mail with return receipt, and keep copies. That date is what any deadline, yours or the law's, runs from.

1. Follow up in writing with the date of your first request and, if your state sets one, the deadline that has passed.
2. Write to the company that backs the GAP, not only the dealer, with copies of your proof of payoff and your first request.
3. Complain to the regulator. Who regulates GAP depends on the state and on whether you bought GAP insurance (the insurance department) or a GAP waiver (often the state's consumer-credit or financial regulator). Your state's page lists the contacts: GAP refund laws by state.
4. Small claims court is the last step; your state's page shows the limit.

GAP Refund reads your contract or payoff letter for free, finds the GAP charge and estimates the refund under your state's rule. If you want, it drafts a refund request that you review, sign and send yourself. It is not a law firm, no attorney reviews the letter, and it does not contact the dealer or the administrator for you.