Favela Insurance

GAP insurance works like this:

You buy a car for $50k, you own it for 3 years it’s now worth $30k but you still owe $45k.

You crash it, insurance pays you what it’s worth, $30k. But you still owe another $15k to the bank.

GAP insurance covers that extra $15k you were upside down on. If you didn’t have GAP, you’d still be paying for the totaled car.