Frequently Asked Questions
What is GAP insurance and when do I need it?
GAP (Guaranteed Asset Protection) covers the difference between what you owe on your auto loan and the actual cash value the insurer pays if the car is totaled or stolen. New vehicles depreciate 15-25% in year one alone - meaning a $40,000 car can owe $35,000 but be worth $32,000 just months in. You need GAP if you owe more than the car's market value.
How much does GAP cost?
From your auto insurer (Allstate, Progressive, GEICO, etc.): $20-$60/year added to your policy. From the dealer at financing: $400-$700 lump sum or $20-30/month. Buying GAP from your insurance company is almost always cheaper than the dealer add-on - many dealer products overcharge by 5-10x.
When can I drop GAP insurance?
Drop GAP once your loan balance is less than the vehicle's market value (positive equity). Use Kelley Blue Book or NADA to check current value, then compare to your loan balance. Typically this happens 24-36 months into a 5-year loan with 10%+ down; longer if you have a small down payment or 72+ month loan term.
Does GAP cover my deductible?
Not always - varies by policy. Some GAP policies absorb up to $1,000 of your collision deductible; others do not. Read the contract before assuming. GAP also does NOT cover: mechanical issues, late payments, extended warranties, or negative equity rolled in from a prior vehicle (unless specifically labeled "GAP Plus" or similar enhanced product).
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