Dealer associations are praising the Department of Defense's decision last week to rescind a controversial interpretation of the Military Lending Act, clearing confusion that has prevented dealers from selling guaranteed asset protection, or GAP, to military members and covered relatives.
The Pentagon withdrew part of a previously amended Q&A published in the December 2017 Interpretive Rule — specifically Q&A No. 2, which classified GAP as a "credit-related cost." The change took effect Friday, Feb. 28.
Under the 2017 interpretation, if a vehicle finance contract for active military members or their dependents included financing for credit-related products or services or provided cash-out financing, the creditor — which would be the dealership or lender — had to comply with the Military Lending Act.
In explaining its recent decision, the Pentagon cited several formal requests for the department to withdraw the amended Q&a…