Vehicle EconomicsIs GAP Insurance Worth It Calculator
Price GAP insurance against your actual modeled negative-equity exposure, not a generic sales pitch.
Why this comes up
GAP insurance is pitched at nearly every finance desk, but few buyers see the actual numbers behind it. GAP pays the gap between what you owe and what your insurer pays out after a total loss. This engine models that gap month by month from your own loan and depreciation numbers, then compares the premium against the real exposure it covers.
How we calculated this
We project your loan balance from a real amortization schedule and your vehicle's value from your own depreciation estimate, month by month, and find the largest gap between them, the peak negative equity. We also find the month your equity turns positive, after which GAP has nothing left to cover.
Worked example, using this page's own defaults ($32,000 price, $1,000 down, 7% APR, 72 months, $6,000/year depreciation): run the calculator above to see the exact peak exposure month and dollar amount, and whether the $700 premium is covered by it.
What this means
- A larger down payment shrinks or eliminates this exposure directly, often more effectively than buying GAP coverage.
- The peak exposure typically happens early in the loan, when interest dominates the payment and depreciation is fastest.
- This compares the premium against peak dollar exposure only, not a probability-weighted claim likelihood, an accident is never guaranteed.
Limitations
This is not insurance advice, a quote, or a claim that a specific policy will pay this amount; it models the exposure GAP coverage exists to insure against. Depreciation is a flat estimate, not a forecast. See Methodology.
Methodology
This engine combines Vehicle Economics' fixed-rate amortization model and equity and depreciation projection model, month by month. See Methodology for the full detail.