Toyota, less than 1% of MSRP and GAP - am I wrong on this decision?

I am negotiating less than 1% monthly on MSRP for a RAV4.

They are pushing that I purchase GAP coverage.

Am I wrong on turning it down, because my cap reduction costs protects me in case of a total loss or theft?

Sounds like you are being out negotiated

I am not sure why you say that.

I want to decline the GAP insurance, but I am not certain how it works if my newly-leased car gets stolen the day after I get it.

Will I have a gap in my coverage (since I was able to significantly lower the selling price)?

Many people report purchasing GAP insurance from your auto insurer to be less expensive than purchasing via Toyota Finance - probably worth exploring. I’d agree your chances of being exposed to a significant outlay upon total loss is small with a Toyota SUV. However, it is good to know you are not at risk should an insurance company value your car at less than lease payoff.

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Does anyone know the math on this?

I’d have even paying a buck a month to my insurance company if it never going to be needed.

If I am getting a monthly payment of 1% of MSRP, isn’t the gap in coverage likely to be virtually nothing?

I have tried to Google this… can someone point us to a chart or graph?

It is very simple. If the insurance value of the vehicle is less than the lease payoff amount, gap insurance will cover the difference. Unless the cost of the insurance is very little, I would pass, since any gap would be small and the chances of a 0-2 year old vehicle being totalled is very small.

Not necessarily. Just get it from your insurer

My experience with Toyota is that GAP was only discussed with Finance at signing…they spring it on you there to make payment seem lower while negotiating.

I passed twice on my Prius cars…however, I could afford the hit.

And, the 1% rule has nothing to do with GAP or residual value or market value…now, if you’re paying .5%, then you’re cap cost is probably so low that you won’t need it.

I am getting closer to an answer to my original question…

So, is there a simple formula to determine the breakeven point of when it pays to get GAP coverage?

IMHO, you should get GAP but not from Toyota. The real cost of gap is so small that you should not be worried about buying it. When Toyota quoted me gap cover it was 10x more than a 3rd party would offer it for.

Get GAP but not from Toyota.


This is how the women in my life speak… “it is JUST a buck.”

Dollars add up fast.

If I pay GAP for the rest of my life expectancy (when I do not need it), that is over $500.00 for absolutely nothing.

There are formulas for everything. There has got to be a formula for GAP, too.

Formulas need real numbers to plug into them. You have come on here asking for help but have not given us ANY numbers at all. You just say below 1% which is not useful.

You have also not shopped around to find out the real cost of GAP insurance and provided us with those numbers either thus making it impossible for us to compare your risk to the real cost.

I think that is why people are not giving you the answer you want to hear.

p.s. I am not sure the sex of a person has any baring on what they say. Unless of course your name is Donald.


90%, if not more, of car companies include GAP in the lease…at least every car I’ve ever leased…all luxury brands, and even my current Ford and Subaru.

So, it’s not really much of an issue for the majority of us. Toyota is the only brand that doesn’t include it, to my knowledge (Lexus does include GAP).

There is no way to calculate, since we have no way of knowing what future market values of cars might be…for example, if gas went to $5 a gallon next year, used car market values for Prius would soar and SUVs would collapse most likely (but not 100% certainty).

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Oh oh… my name IS Donald:

hashtag cole train
hashtag biggot
hashtag lying
hashtag trademark
hashtag justjokin’

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Another thing to consider (to add confusion to the GAP topic)…

When I financed my last car at Toyota, the F&I person said GAP was deductible free. She implied that having this insurance through Toyota skipped the need to place a claim for theft or a total loss through my regular insurance company.

This sounds great in two ways:

  1. This would avoid me paying my $1,000 deductible…
  2. I would not face the possibility of having a rate increase.

Is this true?

So there are several factors at play here:

(1) Should you buy gap coverage at all? You need to look not at your monthly payment but at the discount you’re getting on the car from day 1. Then you need to look at how much value the car loses when you drive it off the lot, its usually around 10%-ish. So if you didn’t save at least 10% off the sticker price then the difference between your adjusted capital cost (what you paid for the car) and the MSRP-10% is your gap. Do the math, see what that gap is and then decide if thats a risk you want to take or not. If its a $500 gap then maybe you just decide to take the risk and the hit if that happens, if there is no gap you obviously don’t need coverage and if the gap is $5k and you don’t have a good rainy day fund then maybe the coverage is worth the peace of mind in exchange for the “few dollars a month”

(2) If you decide to buy coverage, do you buy it from the dealer? According to google, your pros of this option listed above are correct, it does avoid your deductible and doesn’t increase your rates. There are some other pros listed here

(3) Should you instead shop around and buy it elsewhere, like your auto insurance carrier, usually this is cheaper and has some other pros listed here

At the end of the day, its a personal choice. For me personally, I make sure my capitalized costs are at least 10% under MSRP so that I don’t have a gap in my lease, I lease specifically because I don’t like being upside down on cars and I like to change them out frequently so I do not have gap coverage. My insurance carrier does have a “one model year newer” replacement policy which also accomplishes something similar so I don’t lose any sleep at night over it.

Pray tell, how is anyone supposed to come up with a formula for:

A. What your payoff is, at any point in time
B. What your car’s ACV (actual cash value, i.e. insurance value) is, at the same point in time
C. Therefore what the Gap is, at the same point in time (A - B).

A changes every month, B changes by small increments every single day (and not necessarily in the same direction)> as others mentioned, outside factors such as gas prices affect values. A LOT.

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It was you saying that they were pushing and that you were unsure…

Unkindly put, these folks are trained to sense weakness and prey upon it.



Finally, an answer I was looking for.

Now here is the rub…

It has been discussed here that MSRPs and residuals can be falsely inflated…

Do insurance companies even look at MSRP at all? Do they look at Black Book? Do they have their own version of Black Book?

And what if I get 15% off MSRP. Is this safe to assume no gap exists?

So many questions.

It has been discussed here that MSRPs and residuals can be falsely inflated…
>>True MSRP can found on, true residuals can be found here on this forum or on several others.

Do insurance companies even look at MSRP at all? Do they look at Black Book? Do they have their own version of Black Book?
>>Your insurance company can tell you exactly how they calculate the value of a car, a quick call to your broker should answer your question. Mine uses KBB values but yours may use another measurement.

And what if I get 15% off MSRP. Is this safe to assume no gap exists?
>>Yes I would say its a pretty safe bet you’ve minimized your gap if you’re net capitalized costs (the total amount you’re financing through the lease) is 15% below MSRP but an easy way to check is to call your insurance agent, ask how they determine the value, and then do that for your car as if you totaled it tomorrow. For me, I go to KBB and find the private party sales value on my car, one model year newer.