GAP insurance calculator

The risk GAP is designed to address

What Guaranteed Asset Protection means

The Consumer Financial Protection Bureau describes GAP as an optional product intended to cover the difference between the amount owed on an auto loan and what the insurance company pays if the vehicle is stolen or totaled. Standard auto insurance generally pays only up to the vehicle's value.

That makes the starting question a shortfall calculation, not the price of a GAP product. A borrower can have negative equity without knowing whether a particular GAP contract would pay the whole amount.

Consumer definition and shopping guidance: CFPB: What is GAP insurance?

The current snapshot

How this calculator estimates the shortfall

The tool starts with the current loan payoff balance. It treats the vehicle value entered as an estimate of an insurer's actual-cash-value starting point, subtracts the entered deductible, and compares that modeled payment with the debt.

Actual-cash-value methods, policy deductibles and settlement adjustments vary. If your insurer has provided a value estimate, use it. Otherwise, test more than one realistic market value rather than relying on the original purchase price.

Debt and value move differently

The projection combines amortization with depreciation

The loan side uses the entered current balance, APR and remaining term to calculate a level monthly payment and reduce principal each month. The vehicle side compounds the same entered annual percentage decline monthly. At each checkpoint, the calculator compares the projected balance with vehicle value after the deductible.

This is a scenario, not a vehicle appraisal. Real resale value can move unevenly with mileage, condition, repairs, market demand and vehicle history. Change the annual decline to see how sensitive the gap-close month is.

Worked scenario

$32,000 owed on a vehicle worth $27,000

With a $500 deductible, the modeled insurance settlement is $26,500. The current shortfall is therefore $5,500. At 7% APR with 60 months left, the estimated payment is about $634 per month. The future gap depends on how quickly principal falls relative to the entered 12% annual value decline.

The calculator is not the policy

A GAP contract may not equal the displayed gap

Coverage can be subject to maximum benefit amounts, loan-to-value limits, vehicle eligibility, deductible treatment, cancellations and exclusions. Past-due payments, late charges, skipped payments, rolled-in debt, service contracts or other financed add-ons may not be covered. Read the agreement before treating the estimate as insured.

The CFPB says prices can vary greatly and recommends comparing a dealer offer with options from an insurer or lender. Financing the product increases the amount borrowed and total interest. GAP is generally optional; ask for the contract language if someone says it is required.

Optional-product guidance: CFPB on GAP and other auto-loan add-ons.

Recheck after the gap closes

Cancellation or early payoff may create a refund right

The CFPB notes that a consumer may be entitled to a refund after selling, refinancing or prepaying an auto loan and has the right to cancel optional add-on products. Refund rules and calculations depend on the agreement and applicable law. Contact the lender, dealer or provider and keep the cancellation confirmation.

A modeled gap-close month is a prompt to obtain a fresh payoff balance, vehicle value and contract terms. It is not an automatic cancellation recommendation.