Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Maximum negative equity exposure
$163
Month you reach positive equity
1
Monthly loan payment
$614
GAP cost worth it vs exposure (1=yes, 0=no)
0
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How to use this
- 1Enter vehicle purchase price ($).
- 2Enter down payment ($).
- 3Enter loan term (months).
- 4Enter apr (%).
- 5Enter annual depreciation rate (%).
- 6Enter gap insurance cost ($).
- 7Read your maximum negative equity exposure on the right — it updates as you type.
- 8Hit Share to keep the scenario or send it to someone.
About this calculator
GAP (guaranteed asset protection) insurance pays the difference between your car loan balance and your vehicle's actual cash value if it's totaled or stolen before you finish paying it off. It only matters during the window where you owe more than the car is worth — new cars typically depreciate 20% in year one and roughly 15% per year after, while loan balances pay down more slowly, especially with longer terms or small down payments. This calculator projects your loan balance and vehicle value forward month by month using your amortization terms and a depreciation curve, then identifies exactly when you cross into positive equity, so you can see whether GAP coverage's cost is justified for your specific loan-to-value situation rather than buying it reflexively at the dealership.
Worked example
Using the values the calculator loads with:
Inputs
- Vehicle purchase price: 38000 $
- Down payment: 2000 $
- Loan term: 72 months
- APR: 7 %
- Annual depreciation rate: 18 %
- GAP insurance cost: 700 $
Results
- Maximum negative equity exposure: $163
- Month you reach positive equity: 1
- Monthly loan payment: $614
- GAP cost worth it vs exposure (1=yes, 0=no): 0
What each field means
Inputs
- Vehicle purchase price ($)
- The vehicle purchase price used in the calculation, measured in $. Starts at 38000 $ so you have a working example on load.
- Down payment ($)
- The down payment used in the calculation, measured in $. Starts at 2000 $ so you have a working example on load.
- Loan term (months)
- The loan term used in the calculation, measured in months. Starts at 72 months so you have a working example on load. Accepted range: 12–96 months.
- APR (%)
- The apr used in the calculation, measured in %. Starts at 7 % so you have a working example on load. Accepted range: 0–25 %.
- Annual depreciation rate (%)
- The annual depreciation rate used in the calculation, measured in %. Starts at 18 % so you have a working example on load. Accepted range: 5–35 %.
- GAP insurance cost ($)
- The gap insurance cost used in the calculation, measured in $. Starts at 700 $ so you have a working example on load.
Results
- Maximum negative equity exposure
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Month you reach positive equity
- Returned as a whole number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Monthly loan payment
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- GAP cost worth it vs exposure (1=yes, 0=no)
- Returned as a whole number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
When is negative equity the biggest?
Almost always in the first 12-18 months, right after the steepest first-year depreciation hits while your loan balance has barely moved due to how amortization front-loads interest. A car bought with little or no down payment and a 72-84 month term can easily be $5,000-$8,000 underwater in month six.
Does a bigger down payment eliminate the need for GAP insurance?
Often yes. Putting down 20% or more usually keeps your loan balance below the vehicle's depreciated value from day one, closing the gap entirely. This calculator will show a near-zero or zero maximum gap amount in that scenario, meaning GAP coverage would just be an unnecessary cost.
Is dealer-sold GAP insurance a good deal?
Usually not. Dealers commonly charge $700-$1,000 for GAP coverage that many auto insurers or credit unions sell for $150-$300 as a policy add-on, or sometimes include free with certain loan products. Always ask your existing auto insurer for a GAP quote before accepting the dealer's price.
Does regular car insurance already cover the gap?
No. Standard comprehensive and collision coverage only pays the vehicle's actual cash value at the time of loss, not your remaining loan balance. If the car is worth less than you owe, you're on the hook for the difference out of pocket unless you have GAP coverage specifically.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). GAP Insurance Breakeven Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/gap-insurance-breakeven
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/gap-insurance-breakeven" target="_blank" rel="noopener">GAP Insurance Breakeven Calculator — RevenueLab</a> (2026).</p>
Source: [GAP Insurance Breakeven Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/gap-insurance-breakeven) (2026).