What is loan lease payoff coverage? This question is about Gap Insurance Guide

Loan/lease payoff coverage is a type of auto insurance that will help cover the difference between your car’s actual cash value and how much is still owed on a loan or lease. Loan/lease payoff coverage works similarly to gap insurance, but loan/lease payoff coverage has stricter limits on how much it will pay out. Key Things to Know About Loan/Lease Payoff Coverage Loan/lease payoff coverage will typically only cover up to 25% of the car’s actual cash value, depending on your contract. Loan/lease payoff coverage may not cover any deductibles, negative equity from previous loans, extended warranty costs, or overdue loan or lease payments. You can only use loan/lease coverage if your car is declared a total loss. You are usually required to have a full coverage policy before you can get loan/lease payoff coverage. Loan/lease payoff coverage may be available for used cars, depending on your provider. Loan/lease payoff coverage can be more difficult to find than gap insurance, which can usually be purchased from car manufacturers, lenders, lessors, and car insurance companies. Where to Buy Loan/Lease Payoff Coverage Progressive Elephant Insurance Kentucky Farm Bureau If you are worried about owing more than your car is worth, loan/lease payoff coverage and gap insurance are both easy and inexpensive ways to keep your finances safe. To learn more, check out WalletHub’s guide to gap insurance.

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What is loan lease payoff coverage?

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This question is about Gap Insurance Guide

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McKayla Girardin, Car Insurance Writer

@mckayla_girardin • 03/07/22 This answer was first published on 03/07/22. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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Loan/lease payoff coverage is a type of auto insurance that will help cover the difference between your car’s actual cash value and how much is still owed on a loan or lease. Loan/lease payoff coverage works similarly to gap insurance, but loan/lease payoff coverage has stricter limits on how much it will pay out.

Key Things to Know About Loan/Lease Payoff Coverage

Loan/lease payoff coverage will typically only cover up to 25% of the car’s actual cash value, depending on your contract.
Loan/lease payoff coverage may not cover any deductibles, negative equity from previous loans, extended warranty costs, or overdue loan or lease payments.
You can only use loan/lease coverage if your car is declared a total loss.
You are usually required to have a full coverage policy before you can get loan/lease payoff coverage.
Loan/lease payoff coverage may be available for used cars, depending on your provider.
Loan/lease payoff coverage can be more difficult to find than gap insurance, which can usually be purchased from car manufacturers, lenders, lessors, and car insurance companies.

Where to Buy Loan/Lease Payoff Coverage

If you are worried about owing more than your car is worth, loan/lease payoff coverage and gap insurance are both easy and inexpensive ways to keep your finances safe. To learn more, check out WalletHub’s guide to gap insurance.

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Do I need gap insurance if I have full coverage?

Yes, you need gap insurance if you have full coverage and still owe money on a car loan or lease. Gap insurance is needed even if you have full coverage because full coverage does not cover the difference between what you owe on a loan/lease and the car’s actual cash value, like gap insurance does.

When You Need Gap Insurance If You Have Full Coverage

You’re financing/leasing a new vehicle for a...

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Does gap insurance pay off loans?

How do I know if I have gap insurance?

To find out whether you have gap insurance, check your existing car insurance policy and the terms of your loan or lease. Drivers can get gap insurance through their insurance company as an add-on or separately through their auto lender, so it’s important to look for gap coverage in the list of coverages provided by both.

How To Know If You Have Gap Insurance

1. Check with your car insurance company.

You...

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