How do I get around gap insurance?
You may be able to skip gap insurance if you made a down payment of at least 20% on the car when you bought it, or if you're paying off the car loan in less than five years. You don't need gap insurance for the life of the car, just until your loan balance doesn't exceed the car's value.
Is Gap the same as full coverage?
Gap insurance does not cover theft. It only pays when your vehicle is totaled and you owe money on the loan. However, comprehensive insurance does cover theft, and lenders require comprehensive coverage on cars with auto loans.
Is GAP insurance really necessary?
Gap insurance is only needed for a short period of time while the loan value is greater than the overall value of the car being leased or financed. With gap insurance, the insurer would be liable to repay this difference in value should the car get totaled in an accident. Normal car insurance won't cover this.
Is it smart to cancel GAP insurance?
It makes sense to cancel gap insurance once your loan balance is less than your vehicle's actual cash value. Drivers who pay their gap insurance premium upfront may receive a refund when they cancel their policy.
What is the difference between full coverage and gap?
If the car is totaled in an accident or stolen, standard car insurance will only pay you the current value, so you'll lose money paying back the original loan or lease. Gap insurance covers this “gap” between the depreciated value of the car and the amount owed on the loan.