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Can gap insurance help me if I'm upside down on my loan?
I have bad credit and I got a long-term, high-interest car loan. Currently, I owe more than my car is worth, and I’m worried about what might happen if it gets totaled. Is it a good idea to get gap insurance for an upside-down auto loan?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I can see why you’re worried about
your car being totaled when you don’t have gap insurance
. About 45% of car owners across the country owe more than the actual cash value (ACV)
of their vehicles, which could leave them hundreds or thousands of dollars in debt after a total loss accident.In the event of an insufficient insurance payout,
gap insurance
, or Guaranteed Asset Protection insurance, can make up the difference. Unfortunately, it’s not always possible to get gap insurance with an upside-down car loan.Before offering you a policy, a potential insurer will examine:
- Your vehicle’s model and age
- The mileage at the time of purchase
- How long has it been since you bought the car
- Your vehicle’s ownership history
- Your driving record
Having a poor credit score probably won't help either.
Still, it doesn't hurt to ask! You can get gap insurance from your car insurance company, a bank or credit union, or a dealership, but you can generally find the cheapest coverage with the first. Good luck!
View full answer
- Gregory R.
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