What 4th Circ. Military Lending Case Means for Auto Finance

6 minute read | April.14.2023

A split U.S. Court of Appeals for the Fourth Circuit ruled on April 12 that vehicle financing transactions including guaranteed asset protection, or GAP, plans are exempt from the protections of the Military Lending Act.

The MLA's statutory text exempts a credit that is "offered for the express purpose of financing the purchase and is secured by the car." The question before the Fourth Circuit in Davidson v. United Auto Credit Corporation was whether financing the cost of a GAP plan as part of the vehicle financing would put the entire transaction outside the scope of that exemption.