Yes, you can typically get gap insurance on a used car, but its availability and cost depend heavily on the car's age, mileage, and your lender's policies. Gap insurance covers the "difference" between what you owe on your auto loan and the car's actual cash value (ACV) if it's totaled or stolen. For used cars, this gap is often smaller, but it can still exist if you made a small down payment, have a long loan term, or if the car's value depreciates quickly.
Eligibility and Key Factors
Not all providers offer gap coverage for used vehicles. Mainstream providers like State Farm and Progressive often extend it to newer used cars, typically those under three to four model years old and with low mileage. However, for an older used car with higher mileage, finding a policy becomes more challenging. Your best bet is often through the dealership financing the purchase or your primary auto insurer. The cost is generally lower for a used car than a new one because the potential gap is smaller.
When It Makes Sense for a Used Car
Consider gap insurance if:
- You made a down payment of less than 20%.
- You have a loan term longer than 60 months.
- You financed a used car model known for rapid depreciation.
- The loan amount is very close to or exceeds the car's current value.
| Provider | Typical Used Car Eligibility | Approximate Annual Cost | Key Consideration |
|---|
| Dealership | Often available, but can be expensive | $400 - $700 (added to loan) | Most accessible but compare rates. |
| Your Auto Insurer | Varies by company; newer used cars only | $20 - $60 per year | Usually the most cost-effective option. |
| Stand-Alone Gap Provider | Stricter age/mileage limits | $100 - $300 per year | May offer more flexible terms. |
| Credit Union | For members financing through them | $150 - $400 per year | Often competitive rates for members. |
| Online Insurance Marketplaces | Compares multiple providers | Varies widely | Good for quick comparisons. |
Before purchasing, check your loan-to-value ratio. If you have significant equity in the car, gap insurance may be an unnecessary expense. Always read the policy details to understand any age or mileage exclusions.
