McKayla Girardin, Car Insurance Writer
You should get gap insurance on a used car if you owe more on your loan or lease than the used vehicle is worth. For example, if you have a long-term loan/lease or you made a down payment that was significantly less than the car’s actual cash value, gap insurance may be a good idea.
You Should Get Gap Insurance on a Used Car When:
- You do not have enough savings to pay off your loan or lease if the car is stolen or totaled.
- You made a small down payment.
- You have a long-term loan of four years or more.
- You are a single-car household and rely on the vehicle heavily.
- Your loan includes negative equity from a previous vehicle loan.
- You drive more miles than average, which can reduce the vehicle’s value faster.
Gap insurance for a used car can be harder to find since most gap coverage providers will only insure the original owner or leaseholder of the vehicle. Some insurance companies offer loan/lease payoff coverage as an alternative to gap insurance. Loan/lease payoff typically has broader eligibility requirements, making it easier for used cars to qualify.
To learn more, check out WalletHub’s guide to gap insurance.
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