GAP insurance, or “guaranteed auto protection” insurance, is a kind of debt cancellation agreement. Read on to learn what this term means, and when it may be a smart investment for you as a driver. Let our expert authors spell out the facts you need on GAP insurance.

GAP Insurance: What Is Gap Insurance And Why Do You Need It?

GAP Insurance: What Is Gap Insurance And Why Do You Need It?

Most of us are not lucky enough to be able to fork over cash for a new car.  We are forced to put down what money we can, and take a loan for the rest.  But it’s worth it for those new wheels, right?  If your downpayment is a small one, (usually under 20%), your monthly payments are sizable due to high interest rates, or you are leasing the car, you will want to consider purchasing gap insurance.

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Auto Loan Lease Coverage (or "GAP Insurance"): What It Is & Why You May Need It

Auto Loan Lease Coverage (or

GAP Insurance, or Auto Loan Lease Coverage as it is technically named, is not an insurance policy at all.  Guaranteed Asset Protection or Guaranteed Auto Protection is actually a debt cancellation agreement.  This “protection”, which is most often sold to you when discussing the economic details of your purchase with an auto dealership’s Financial Manager, is designed to reduce the impact of the negative equity you have in a new vehicle, if you should be in a total loss collision shortly after purchase.

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