Gap Insurance Calculator
Estimate the gap between your car loan balance and the car's value if it's totaled, the month you stop being underwater, and what gap insurance would cost from your insurer or the dealer.
Gap insurance calculator
What gap insurance covers
Gap insurance (guaranteed asset protection) pays the difference between what you still owe on a car loan or lease and the car's actual cash value if the car is totaled or stolen. Your regular collision or comprehensive coverage pays only the car's current value, minus your deductible. It applies only to a total loss, not repairs, and many gap policies don't pay your deductible (some insurers' versions include deductible help, so check yours).
Example: a $40,000 car with $2,000 down and $3,000 of tax and fees financed at 7% for 72 months is a $41,000 loan ($699.01 a month). If it's totaled after 12 months, about $35,301 is still owed while the car is worth about $33,600 (84% of its price, the Kelley Blue Book first-year average). Gap insurance covers the $1,701 difference; without it you'd also pay the $1,000 deductible, $2,701 in all. Roll in Edmunds' average $7,214 of negative equity and the gap at 12 months grows to $7,913, with the loan underwater until about month 42 instead of month 27.
Car gap insurance: do you need it?
The Insurance Information Institute (as cited by insure.com) suggests considering gap insurance for a car if you put down less than 20%, took a loan of 60 months or longer, are leasing, or rolled an old loan into the new one. Many buyers do: Edmunds found that 29.3% of trade-ins toward new cars in the fourth quarter of 2025 had negative equity, owing $7,214 on average, and 9.2% owed more than $15,000. If you own the car outright or owe less than it's worth, you don't need gap coverage.
Gap insurance for car loans: where to buy it
Adding gap coverage to a car insurance policy costs about $88 a year on average (insure.com, based on quotes from major insurers), and you can usually drop it once the loan balance falls below the car's value. Dealers and lenders sell it as a one-time charge, often rolled into the loan, so you pay interest on it too; prices vary widely, so compare the dealer's quote with your insurer's. Some lenders and leases include gap coverage already, so check your contract before buying.
Gap insurance auto: refunds when you pay off early
If you bought gap coverage from a dealer for a one-time fee and pay off, refinance or sell the car early, you may be owed a partial refund of the unused part; the rules depend on the contract and your state. Ask the dealer or gap provider for the cancellation form. Insurer gap coverage stops with your next premium once you remove it.
How the calculator estimates value
Car value starts at the price you paid and falls by the year-1 percentage, then by the later-year percentage each year. The defaults (16% in year one, then 14.4% a year) follow Kelley Blue Book's average new-car table, which has a car worth 45% of its price after five years. Your insurer will use the actual cash value of your specific car, so treat the result as an estimate and change the rates for your model.
Common questions
What does gap insurance cover?
The difference between your loan or lease balance and the car's actual cash value if it's totaled or stolen.
How much is gap insurance?
About $88 a year added to a car insurance policy on average (insure.com, 2026); dealer gap is a one-time charge that varies.
Do I need gap insurance?
Consider it with under 20% down, a loan of 60 months or more, a lease, or negative equity rolled in (Insurance Information Institute).
Does gap insurance cover my deductible?
Usually not, though some insurers' gap products include deductible help.
When can I cancel gap insurance?
Once you owe less than the car is worth; the calculator shows the month that's likely to happen.
Sources
- Edmunds via CarScoops: Record negative equity on trade-ins (Jan 18, 2026)
- Kelley Blue Book: Car depreciation
- insure.com: How much does gap insurance cost? (updated Jun 5, 2026)
Related
General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.