The value of your new vehicle drops the moment it leaves the dealer’s lot. In five years, it’ll be worth only about 35 percent of what you paid, research shows.

If you took out a loan to buy the car, you’ll probably owe more than it’s worth for several years. That could be a problem if it’s totaled in a crash (or stolen and not recovered), because auto insurance policies typically cover only the value of your vehicle—not what you owe.

That’s where a GAP waiver can help. An acronym for “Guaranteed Asset Protection,” GAP compensates you for the difference between your outstanding loan balance and the vehicle’s actual value, potentially saving you thousands of dollars out of pocket if your car is declared a total loss. It’s an optional add-on when you buy your vehicle—but often worth the price for peace of mind.

  • GAP makes sense if: you’re buying a new vehicle; your down payment is less than 20 percent; your loan term is five years or longer; and/or your new vehicle has a faster-than-average depreciation rate.
  • You don’t need GAP if: you own the car outright; you owe less on the loan than the car is worth; or you can afford the difference between what you owe and what the car is worth.

GAP is available through auto loan providers, auto insurance companies, auto dealerships and independent brokers. Cost can vary considerably, so it pays to shop around for the best price.

Get GAP Now

GAP waivers are available to AAA auto loan customers.

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