Gap Insurance Calculator
If your car is totaled or stolen while you still owe more than it’s worth, standard insurance pays only the car’s value — leaving you to cover the rest of the loan. This gap insurance calculator shows exactly how big that shortfall is.
Find your “gap”
If your car is totaled, standard insurance pays its current value — not your loan balance. The difference is the gap.
Your potential out-of-pocket gap
$0
- Loan balance$0
- Insurance pays (ACV − deductible)$0
Formula & assumptions
A positive gap means gap insurance could be worthwhile. ACV is what your insurer assigns at the time of loss and depreciates over time — use a current valuation, not your purchase price.
How gap insurance works
The moment you drive a financed car off the lot, it starts depreciating — often faster than you pay down the loan, especially in the first couple of years. If the car is then totaled in a crash or stolen and not recovered, your auto insurer pays its actual cash value (ACV): what the vehicle is worth that day, not what you paid and not what you still owe. If your loan balance is higher than the ACV, you’re still on the hook for the difference even though you no longer have the car. That difference is the “gap,” and gap insurance is designed to pay it off.
A worked example
Suppose you owe $28,000 on your auto loan, but the car’s actual cash value has dropped to $22,000, and your collision deductible is $500. After a total loss, your insurer pays the ACV minus the deductible — $22,000 − $500 = $21,500. Subtract that from the $28,000 you owe and you’re left with a $6,500 gap you’d have to pay out of pocket. Gap insurance covers that $6,500 (and, with some policies, the deductible too). Plug your own numbers into the calculator above to see your figure instantly.
What affects the size of your gap
- Down payment. A small or zero down payment means you start “upside down,” owing more than the car is worth from day one.
- Loan length. 72- and 84-month loans pay down principal slowly, so depreciation outpaces your balance for longer.
- Depreciation rate. Some models lose value much faster than others; a fast depreciator widens the gap.
- Rolled-over negative equity. Financing the unpaid balance of a previous car into the new loan stacks the deck against you.
- Interest rate. A higher rate means more of each early payment goes to interest rather than principal, keeping your balance high.
Is gap insurance worth it for you?
Use the result above as your guide. If the calculator shows a meaningful positive gap, the coverage is usually inexpensive relative to the risk — often a few dollars a month added to your auto policy, or a one-time charge if bought through the lender (dealer gap is frequently the most expensive route, so compare). If the calculator shows no gap, you’re in the fortunate position of having equity in the car, and paying for gap coverage would be money wasted. Re-run the numbers once a year: as you pay down the loan, the gap shrinks and eventually disappears, at which point you can cancel the coverage.
Leasing? Most leases require gap coverage and many build it into the contract — check before buying it separately. And remember that gap insurance only sits on top of comprehensive and collision coverage; if you don’t carry those, there’s no ACV payout for gap insurance to supplement in the first place.
Frequently asked questions
What is gap insurance?
Gap insurance (Guaranteed Asset Protection) covers the difference between what you owe on a car loan or lease and the car’s actual cash value (ACV) if it’s declared a total loss. Without it, you can be left paying a loan on a car you no longer have.
How do I calculate the gap?
Subtract what your insurer would pay — the car’s current value minus your deductible — from your loan or lease payoff balance. If the result is positive, that amount is your gap and what gap coverage would absorb.
Do I need gap insurance?
It’s most useful when you made a small down payment, financed for 60+ months, rolled negative equity from a prior loan into this one, or bought a fast-depreciating model. If you owe less than the car is worth, you generally don’t need it.
When can I drop gap insurance?
Once your loan balance falls below the car’s actual cash value — meaning a total-loss payout would cover the loan — the gap is gone and you can usually cancel the coverage, sometimes for a partial refund.
Does gap insurance cover my deductible?
Some gap policies pay your deductible too, but many do not. Read the terms — our calculator treats the deductible as out-of-pocket so you see the most conservative figure.
Sources & references
Figures and methodology on this page are drawn from the following public sources. Insurance data changes — we note when this page was last reviewed above, and we encourage you to check the latest figures directly.
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