Gap Insurance Calculator

How the gap decision works

• The gap is your loan balance minus what the vehicle is worth today. It is largest in the first 1–2 years of a new-car loan because cars depreciate fastest while the principal owes nearly the full price.
• If the car is totaled, collision pays vehicle value minus your deductible; the remaining balance is a loan you keep paying with no car. That gap amount is the exposure gap insurance exists to erase.
• Premium bands: standalone gap endorsement riders carriers sell commonly run about $20–$45 per year, while gap contracts sold at the dealership and rolled into the financing commonly cost $400–$700 or more — several times the standalone price for identical protection.
• Time to drop out: the exposure decays — once the loan-to-value ratio climbs back near 80%, standalone gap costs more per year than the exposure it covers. Re-run the math at each renewal and cancel when the gap is small.
• The verdict thresholds in this calculator: net loss ≥ $1,000 after your deductible counts as "recommend pricing a policy"; a small positive exposure counts as "marginal"; zero or negative gap means "skip".

Worked example

Loan balance $32,500; trade-in value $29,000; monthly principal paydown $450; collision deductible $500. Loan-to-value is 112%. Gap: $3,500. Out of pocket if totaled today: $3,000. Months to positive equity: 8 ($450 × 8 = $3,600).

Against a standalone gap rider at $20–$45/year, a $3,000 exposure is obviously worth covering for one year; the question decays quickly, though — cancel the coverage as the loan-to-value ratio improves below ~80%.

Buying gap on a commercial or heavy vehicle

Owner-operators financing heavy equipment face the same negative-equity math, scaled up. For the financing side of a big-truck loan — depreciation, balloon terms and total cost — see the commercial-vehicle loan math on Trucker Numbers' semi-truck loan calculator. Do the equity curve first, then decide on gap — never at signing by default.

Frequently asked questions

When is gap insurance not worth buying?

When your loan balance is at or below vehicle value — no gap, nothing to insure. It also stops being worth it near the 1-year mark of a modest loan: the exposure after deductible is small relative to policy cost. Re-check at each renewal instead of paying by inertia.

What states limit the cost of gap products?

Several states cap the price of debt-cancellation-type products sold through dealers, and licensing differs by state. Verify your state's rules with your state DOI consumer division before assuming a dealer quote is standard.

Does gap cover the deductible?

Most standalone gap endorsements pay only the loan-value shortfall, not the deductible. Some dealer contracts add a deductible allowance. Read the certificate — the cash you owe after a total loss = the portion of the gap that the specific contract excludes.

Can I cancel gap after the first year?

Yes with most carriers and usually with dealer contracts too; for financed contracts, prorated refunds flow back to the loan. If you have booked gap as a standalone endorsement, cancel it before renewal each year and re-run this calculator.

Estimates last reviewed October 25, 2026. Results are estimates for educational use; not insurance advice. Methodology →