Gap Insurance Calculator
Gap cover only pays if there is a gap. If your car is worth more than you owe, it can never pay out a penny. This works out whether you have a gap, how big it is, and roughly when it closes.
Your gap right now
-
- You still owe
- $0
- The car is worth
- $0
- Biggest the gap ever gets
- $0
- The gap closes around
- -
What you owe against what it is worth
Both bars are money. The amount the first stands above the second is the gap, and the gap is the only thing this cover pays for.
Move it and watch
-
at {v} for deposit
And what you can change
Why your own figure may differ
The gap over the life of the loan
Both numbers fall. The question is only ever which one falls faster, and when they cross.
| After | You owe | It is worth | Gap |
|---|
The gap is what you owe minus what the car is worth. Gap cover pays that difference if the car is written off or stolen. Once the value overtakes the balance there is nothing left for it to pay.
Gap insurance: real examples
Three situations, three different answers. Click any card to load it.
- A real gap
Nothing down, 84-month loan
A $35,000 car, one year in, losing 25% a year.
You are $4,734 short. Written off tomorrow, you would owe that on a car you no longer have - and it gets worse before it gets better.
Load this scenario in the calculator → - No gap at all
Big deposit, short loan
The same car with $10,000 down over 48 months.
You are $9,062 ahead from the start. There is nothing for gap cover to pay, so buying it would be wasted money.
Load this scenario in the calculator → - The gap has closed
Six years into that same loan
The balance has finally caught the value.
The gap is gone. Cover can no longer pay out anything, so if you are still paying for a policy it is worth cancelling for a partial refund.
Load this scenario in the calculator →
Common questions about gap insurance
What does gap insurance actually cover?
The difference between what your car is worth and what you still owe, if it is written off or stolen. Your ordinary insurer pays what the car was worth on the day. If you owe more than that, the rest is yours to find, and it is due immediately. Gap cover pays that difference.
Do I need it?
Only if there is a gap. If your car is worth more than you owe, there is nothing to cover and buying it is wasted money. This tool works out whether a gap exists for you now, and how long it lasts. For many people it is about the first two to three years and then never again.
Why does a gap appear at all?
Because a car loses value faster than a loan shrinks, especially early on. A new car drops sharply the moment you drive it away, while a long loan has barely touched the balance. Small deposit plus long loan is the recipe for a gap.
Where should I buy it?
Rarely from the dealer. They typically charge several times what your own motor insurer would, and rolling it into the loan means paying interest on it too. Ask your insurer first, then compare a standalone policy.
What if I already have it and no longer need one?
You can usually cancel and get a partial refund for the unused part, particularly if you paid up front. Once your car is worth more than you owe, the policy cannot pay out anything, so continuing to pay for it is pure waste.
Does it cover my deductible or missed payments?
Sometimes the deductible, often not. Missed payments and late fees are usually excluded. Read what the policy actually pays before assuming it covers everything, because the marketing tends to be vaguer than the contract.