GAP (Guaranteed Asset Protection) insurance covers the difference between what you owe on your car loan or lease and the car’s actual value if it is totalled or stolen. Standard auto insurance typically only covers the car’s current market value, which may be lower than your remaining loan or lease balance due to depreciation.
GAP insurance can be beneficial if:
You made a small or no down payment, leaving you with a higher loan balance.
Your car depreciates quickly, increasing the risk of owing more than its value.
You rolled negative equity from a previous car loan into your current financing.
You have a long loan term (60 months or more), making it easier to fall into negative equity.
Many lenders or leasing companies require GAP insurance, but even if it is optional, it can provide peace of mind by preventing you from having to pay out of pocket for a loan balance on a car you no longer have.
Interested in financing or leasing a car? Explore your options at Auto Bandit to find the best deals today.
