GAP Insurance Cost-Benefit Calculator
GAP insurance covers the difference between what you owe and what your car is worth if totaled — the 'gap'. This shows whether you're upside-down enough to need GAP and how dealer vs credit union pricing differs.
| Loan amount | — |
| Year 1 loan balance | — |
| Year 1 car value | — |
| Year 1 gap | — |
| Peak negative equity month | — |
| GAP cost | — |
| GAP value (peak gap − cost) | — |
GAP (Guaranteed Asset Protection) insurance pays the difference between your auto loan balance and the car's actual cash value if the car is totaled or stolen. Without GAP, you owe the lender thousands after the insurance check.
When You're Underwater
Cars depreciate 20-25% in year 1, 12-15% annually thereafter. Long loans (72-84 months), low down payments (under 10%), and high-depreciation models (luxury sedans, EVs without tax credits) create deep negative equity for 24-36 months.
How GAP Pays
Comprehensive auto insurance pays actual cash value (ACV). GAP pays the difference between ACV and loan balance, plus typically the comp/collision deductible. Example: car ACV $18K, loan balance $24K, deductible $1K. Insurer pays $17K, GAP pays $7K. You owe nothing.
Dealer GAP vs Alternative Sources
Dealers mark up GAP 200-400%. A $200 wholesale GAP becomes $600-1200 financed into the loan (paying interest on the markup). Credit unions ($200-400 flat fee), USAA, GEICO, State Farm offer GAP cheaper. Always shop GAP after loan closing.
When to Skip GAP
If down payment is 20%+, loan term is 48 months or less, or vehicle has low depreciation (Tacoma, Wrangler, certain Lexus models), peak negative equity may stay below $1500 — less than typical GAP cost. Run the numbers.
Last updated May 2026. Sources: NAIC Auto Insurance, CFPB Auto Loan.