A GAP refund calculator estimates how much of the price of GAP insurance or an extended warranty you get back when you cancel early. Formula: Pro-rata: price×remaining/term − fee. Rule78: price×k(k+1)/(n(n+1)) − fee. For an $800 GAP contract with 60 months, cancelled after 18 months with a $50 fee, the pro-rata refund is $510.00 and the Rule of 78s refund is about $344.75.
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How to use the GAP refund calculator
- Choose GAP insurance or extended warranty.
- Enter the contract price and the term in months.
- Enter the months used and any cancellation fee.
- Choose pro-rata or Rule of 78s, and compare both refunds in the table.
What formula does the GAP refund calculator use?
Let P be the price you paid for the GAP or warranty contract, n the term in months, k the months remaining and F any cancellation fee.
- Pro-rata: refund = P × k ÷ n − F
- Rule of 78s: refund = P × k(k + 1) ÷ (n(n + 1)) − F
Pro-rata refunds the unused share evenly. The Rule of 78s treats more of the price as earned early in the contract, so the refund is smaller, especially in the first half of the term. Your contract says which method applies.
GAP refund calculator worked example
| Contract | Used | Pro-rata refund | Rule of 78s refund |
|---|---|---|---|
| $800 GAP, 60 months, $50 fee | 18 months | $510.00 | $344.75 |
| $800 GAP, 60 months, $50 fee | 36 months | $270.00 | $81.15 |
| $2,000 warranty, 36 months, $75 fee | 12 months | $1,258.33 | $825.90 |
For the first row, 42 of 60 months remain: pro-rata gives $800 × 42 ÷ 60 − $50 = $510.00, while the Rule of 78s gives $800 × (42 × 43) ÷ (60 × 61) − $50 ≈ $344.75.
When you can get a GAP refund
GAP (guaranteed asset protection) covers the difference between what you owe on a car loan and what the car is worth if it is totaled or stolen. Once the loan is paid off early, refinanced or the car is sold, the coverage usually has no purpose, and many contracts allow a refund of the unused part. The CFPB notes that you may be able to cancel GAP and get a refund; check your contract and state law for the rules and any fee.
How to request a refund
- Find the GAP or service contract and the cancellation section.
- Get proof of the payoff, refinance or sale date.
- Send a written cancellation request to the administrator or dealer named in the contract, and keep a copy.
- If the contract was financed and the loan is still open, expect the refund to go to the lender and reduce your balance.
- Follow up if you have not heard back. You can submit a complaint to the CFPB or your state attorney general if a refund is refused.
What changes the refund
The refund falls as months pass and is lower under the Rule of 78s. A cancellation fee comes straight off the total. Some contracts stop refunds after a claim has been paid, and some states set their own refund method. Use the GAP refund calculator to estimate both methods, then compare with the figure the administrator gives you.
Estimates for education only, not financial advice. Your lender’s figures are final.
Pro rata versus Rule of 78 refunds
A GAP refund calculator is only as good as the method it assumes. Contracts use one of two common methods to work out the unearned premium. Pro rata refunds the unused share of the term in a straight line. The Rule of 78 front-loads the earned premium, so early cancellations get less back. Take a $900 GAP policy on a 60-month loan, canceled after 24 months.
- Pro rata: 36 of 60 months remain, so the refund is $900 × 36 ÷ 60 = $540, minus any cancellation fee. With a $50 fee, you would get $490.
- Rule of 78: the remaining share is (36 × 37 ÷ 2) ÷ (60 × 61 ÷ 2) = 666 ÷ 1,830, or about 36.4%, so the refund is about $328 before fees.
The GAP refund calculator uses the pro rata method. Read your contract to see which method applies, and remember that if the refund goes to the lender, it reduces the loan balance rather than coming to you as cash. Running the GAP refund calculator both ways shows whether the method makes a big difference in your case.
Related converters and calculators
Related calculators:
- Auto loan calculator: car payments
- Loan calculator: any fixed loan
- Amortization calculator: loan balance
Sources
CFPB: What is GAP insurance?; CFPB: Submit a complaint.
Questions about this calculator
How do I calculate my GAP insurance refund?
Multiply the price by months remaining ÷ total months (pro-rata), then subtract any cancellation fee.
What is the Rule of 78s?
A method that treats more of the price as earned early, so refunds are smaller than pro-rata.
Who gets the GAP refund?
If the GAP was financed and the loan is still open, the refund usually goes to the lender and lowers your balance.
Can I cancel GAP after paying off my car?
Often yes. Check your contract for the cancellation rules and fee.
Can I get a warranty refund too?
Many extended service contracts allow pro-rata refunds when cancelled; the contract sets the method.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
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