GAP Insurance Calculator
Find out exactly how much you owe above your car's value — and whether GAP coverage is worth buying for your specific loan.
What Is GAP Insurance?
Guaranteed Asset Protection (GAP) insurance pays the difference between what you owe on a car loan and what your auto insurer pays if your vehicle is totaled or stolen. Standard comprehensive and collision coverage only pays the car's current market value — not what you owe. If you financed a $35,000 car with $0 down and a 72-month loan, the car may be worth $25,000 at month 12, but you could owe $30,000. A total loss leaves a $5,000 shortfall — plus your deductible. GAP covers that shortfall so you don't owe money on a car you no longer have. Source: National Association of Insurance Commissioners (naic.org).
When Do You Need GAP Insurance?
You need GAP coverage if your loan balance exceeds the vehicle's market value — this is called being "underwater" or having negative equity. The risk is highest in the first 12–24 months of a car loan when depreciation outpaces principal paydown. New cars lose 15–25% of value in year one alone. GAP is especially important if you put less than 20% down, financed for 60+ months, rolled negative equity from a previous vehicle into the new loan, or bought a brand with above-average depreciation (luxury vehicles, certain domestic trucks). Once your loan balance drops below the car's value — meaning you have positive equity — GAP insurance is no longer needed.
Dealer GAP vs Insurer GAP: Which Is Cheaper?
Dealer-sold GAP insurance typically costs $400–$900, financed into the loan (meaning you pay interest on it). Insurer-provided GAP is usually $20–$60 per year added to your existing auto policy — often 5–10× cheaper over the loan period. The calculator compares both options. Most consumer finance experts (including the CFPB at consumerfinance.gov) recommend buying GAP from your insurer rather than the dealership. Note: some dealer GAP contracts include a deductible waiver that insurer GAP may not — check your specific policy terms before deciding.
When to Cancel GAP Insurance
Cancel GAP insurance as soon as your loan balance is lower than the vehicle's current market value (positive equity). This is simple to check: look up your car's value on Kelley Blue Book or NADA, compare it to your current payoff quote from your lender, and if value exceeds balance, call your insurer to remove GAP. Keeping it past this point is pure waste — you're insuring a gap that no longer exists. Most borrowers reach positive equity 18–36 months into a standard loan when paired with a 20% down payment.