Capital One Gap Insurance
Capital One offers Guaranteed Asset Protection (or “gap” insurance) to protect you if your car is totaled or stolen. Click here to learn more!
Written by Jacqulyn Graber
Reviewed by Kathleen Flear
Table of Contents
- Does Capital One offer gap insurance?
- How does gap insurance work?
- How much does Capital One gap insurance cost?
- How to get gap insurance from Capital One Auto Finance
- FAQs
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Capital One offers Guaranteed Asset Protection (or “gap” insurance) to protect you if your car is totaled or stolen.
Gap insurance
helps cover the difference between the amount paid by your insurer and your remaining car loan balance.Your regular
car insurance
policy usually covers the fair market value of the car—not the amount you still owe on an auto loan. Unfortunately, because vehicles can quickly depreciate, it is common for you to owe more than the car is worth, especially at the beginning of a loan.We’ll go through all of the details about Capital One gap insurance, including how it works, how much it costs, and what it covers. Let’s dive in!
MORE: How to get a car loan from a credit union
Does Capital One offer gap insurance?
Yes—Capital One offers gap insurance for individuals financing their vehicles with a
car loan
through Capital One Bank.To be clear: gap insurance is an optional type of coverage that you can pay for through your regular car insurance provider, your dealership, or added onto your loan agreement when financing with a bank or credit union.
If you choose Capital One Auto Finance as your lender, you’ll be offered the opportunity to purchase gap insurance and add the price to your total loan amount. You cannot purchase gap insurance from Capital One if you are not using the company as your auto loan provider.
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But what exactly is gap coverage? New vehicles depreciate the second you put the key in the ignition after signing on the dotted line. Most cars depreciate by about 20% of their market value in the first year alone—no matter how well you take care of it.
Your traditional car insurance coverage will only pay out the depreciated value of your car if it’s stolen or totaled. Thanks to depreciation, this means that you’ll only get the current actual cash value of your vehicle when making a claim—you won’t necessarily get enough to pay off the amount you owe on your loan.
Gap insurance will help pay the difference—or the remaining loan payments—if your vehicle is stolen or totaled while your loan balance exceeds its depreciated value.
If you purchase gap insurance through a financial institution like Capital One when financing a new vehicle, the cost will get added to your monthly payments. Keep in mind that this means you’ll be paying your auto lender’s interest rate on the gap insurance fees, as well.
If you purchase a new or used car from a car dealership using a bank or credit union, gap insurance will be optional. However, gap insurance will likely be required if you lease a vehicle.
How much does Capital One gap insurance cost?
Generally, it only costs a few dollars a month to add GAP insurance to a
full-coverage insurance
policy. According to the Insurance Industry Institute, you can secure this type of coverage as an add-on to your annual premium for just $20 a year, or 5% to 6% of your full-coverage premium. Keep in mind that this is an estimated number. What you pay can vary based on your age, driving record, state, credit history, and the model and model year of the vehicle you own.
With that being said, if you purchase gap insurance through a dealership or a lender (like Capital One), you will likely pay interest on this coverage.
Some auto loan providers offer online calculators which allow you to estimate what your monthly payments will be. These calculators will ask you to consider the price of your desired vehicle, the size of your down payment, your credit score, and whether or not you add on optional enhancements like gap insurance and other types of warranties.
You can also estimate what gap insurance will cost through Capital One if you apply for loan pre-qualification.
How to get gap insurance from Capital One Auto Finance
When applying for an auto loan through Capital One, you’ll be offered gap insurance as an option.
It’s a good idea to purchase gap insurance if:
- Your down payment was smaller than 20% of the total vehicle price
- Your financing term was for 50+ months
- You leased your vehicle (in this case, gap insurance is typically required)
- You purchased a vehicle that’s known to depreciate quickly
- You rolled over negative equity from an old car loan into the new loan
Remember that you only need to keep gap insurance on your policy while your owed amount is higher than your car’s actual cash value. It’s no longer worth it once your car loan balance goes below your car’s current value
Fortunately, Capital one allows you to
cancel your gap insurance
down the line, which will result in an auto refinance and lower monthly payments. You may even receive a gap insurance refund for a portion of your unused premiums. Usually, you need to pay for the gap insurance upfront to qualify for a refund. You may still qualify for a refund if you pay monthly, but it will likely be much smaller than if you paid upfront.
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FAQs
What does gap insurance cover?
Gap insurance covers the remaining amount on your auto loan if your vehicle is stolen or deemed a total loss. Your regular car insurance policy will only cover the depreciated value of your vehicle, which could be far less than what your remaining loan balance is.
What’s the difference between gap insurance and car insurance?
If your 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.
However, auto insurance companies protect against less severe damages, whereas gap insurance only kicks in if your car is deemed a total loss.
