: You bought a luxury sedan, high-end SUV, or electric vehicle, which lose value faster than average.
: You put down less than 20% of the purchase price. should i buy gap insurance on a used car
You should consider gap insurance for a used car if your purchase meets any of these criteria: : You bought a luxury sedan, high-end SUV,
For most used car buyers, gap insurance is unnecessary, but it becomes a critical financial safety net if you are "upside down" on your loan—meaning you owe more than the car's current market value. While used cars depreciate more slowly than new ones (roughly 25% vs. 60% over three years), high-risk loan structures can still leave you with a multi-thousand-dollar debt if the vehicle is totaled or stolen. While used cars depreciate more slowly than new
: Your financing lasts 60 months (5 years) or longer , which slows equity buildup.
: You rolled debt from a previous car loan into your new one.
: You drive significantly more than 15,000 miles per year, rapidly lowering the car's resale value. Situations Where You Can Skip It What Is GAP Insurance and Do You Really Need It?