Gap insurance pays the difference between what your car is worth and what you still owe if it’s totaled or stolen. Whether it’s worth buying depends on one number: how far “underwater” your loan is right now. Enter your loan details below and we’ll estimate your current balance, your car’s likely value, the gap between them, and how long it will take to close.
Gap Insurance Calculator
How this calculator works
Your loan balance is calculated with a standard amortization formula, so the early months (when most of your payment goes to interest) are reflected properly. If you don’t enter a market value, we estimate one from typical depreciation curves: a new car loses roughly 9% the moment it’s titled, about 20% in its first year and 10–15% a year after that, while a used car loses closer to 12% a year. The “months until gap closes” figure is the point where your shrinking balance finally drops below the car’s shrinking value.
When gap insurance is worth it
- You put down less than 20%, or rolled taxes, fees or negative equity into the loan.
- Your loan is 60 months or longer — long terms keep you underwater for years.
- You bought a model that depreciates fast (luxury sedans, most EVs, large SUVs).
- You drive far more than 12,000 miles a year, which pushes resale value down faster.
- You’re leasing — most leases require it, and it’s usually built into the payment.
Read the full breakdown of what it costs in How Much Is Gap Insurance?, and before you buy, check the situations where gap insurance does not pay.
Your own auto insurer usually adds it for $20–$60 a year — a fraction of the dealer’s price. Compare quotes before you sign.
Frequently asked questions
Can I cancel gap insurance once my loan is no longer underwater?
Yes. If you bought it from the dealer as a one-time policy, you’re owed a prorated refund of the unused portion. If it’s added to your auto policy, simply ask your insurer to remove the coverage.
Does gap insurance cover my deductible?
Some policies do (often up to $1,000), many don’t. It’s one of the three questions to ask before buying, along with whether it covers negative equity rolled in from a previous loan and whether missed payments or late fees are excluded.
Is gap insurance required?
No state requires it, but many lenders require it on leases and some require it on loans with little or no down payment. Check your finance contract — if it’s required, you can still shop for it rather than taking the dealer’s price.