GAP Insurance Calculator: Should You Buy Guaranteed Asset Protection?
GAP insurance, short for Guaranteed Asset Protection, covers the difference between what you owe on a car loan or lease and what the vehicle is actually worth if it is stolen or declared a total loss. Because new cars depreciate quickly, drivers who finance with a small down payment or a long term often owe more than the car's market value for the first few years. This calculator compares your current car value against your remaining balance to reveal that gap instantly.
The math is simple but consequential. If your car is worth $18,000 and you still owe $23,000, standard comprehensive or collision insurance would pay out only the $18,000 market value after a total loss. You would still be responsible for the remaining $5,000, even though you no longer have a car to drive. GAP insurance is designed to cover exactly that shortfall, which is why lenders and dealerships frequently offer it at signing.
Whether GAP coverage is worth it depends on the size of your exposure and the cost of the premium. If the calculator shows a positive gap, weigh the potential out-of-pocket loss against the annual premium. A small gap combined with an expensive policy may not justify the cost, while a large gap on a rapidly depreciating vehicle usually does. Once your loan balance falls below the car's value, the gap disappears and the coverage no longer provides any benefit, so it is worth re-checking each year.
Use this tool alongside our auto loan calculator to see how your balance shrinks over time, and our loan calculator to model different down payments and terms. If you are budgeting for a larger purchase, the mortgage calculator can help you plan the rest of your finances.