Auto Loan/Lease Gap Check

Step by step

1. When you enter a market value, it is used directly.
2. Otherwise the fallback estimate applies the first-year drop once to the original price, then the annual declining balance for each year of age: original price × (1 − first-year drop) × (1 − annual rate)^(years old), using the fixed valuation year shown in the assumptions. A current-model-year car (age 0) carries the first-year drop alone.
3. Negative equity = payoff − value, never below zero.
4. Your collision or comprehensive deductible is deducted from the insurer's payment before the lender is paid, so the real out-of-pocket figure is the negative equity shown plus that deductible.

The formula

Gap = max(0, payoff − value); fallback value = original price × (1 − 0.20) × (1 − 0.15)^age.

Assumptions and their default values

Some of these change with the state you select.

Important disclosures

1. This tool is educational only. It illustrates potential exposure using the assumptions shown — it is not insurance advice, a price, or an offer of coverage, and it does not determine whether any coverage amount is right for you. Policy language varies; review your actual policy and discuss your situation with a licensed insurance professional.
2. The fallback vehicle-value estimate (a first-year drop, then a declining balance each year after) is a rough educational approximation — actual market value depends on mileage, condition, trim, and the used-car market. A valuation service or dealer appraisal is more reliable.
3. Total-loss settlements are based on the insurer's actual-cash-value determination at claim time, which this tool cannot predict.
4. The real out-of-pocket figure after a total loss also includes your collision or comprehensive deductible, which comes off the insurer's payment before the lender is paid. It is not included in the negative-equity figure shown here.