GAP coverage, extended warranties, and other add-ons may be rolled into your auto loan and you could be paying interest on them
You may be financing coverage you forgot about: 71% of borrowers couldn't recall whether their loan includes GAP or an extended warranty.
Dig out your loan paperwork: Check what add-ons you bought, what they cost, what they cover, and whether you still need them.
Don't focus only on the monthly payment: Review your APR and total interest to see what your car loan is really costing you.
You probably know your monthly car payment. But do you know everything you're actually paying for inside that payment?
A new Caribou survey of 2,000 U.S. drivers with active auto loans found 71% couldn't recall whether their loan includes GAP insurance, and the same percentage didn't know whether they're paying for a vehicle service contract, commonly called an extended warranty.
That's worth checking because these products can add to the amount you finance, which means you could also be paying interest on them.
Grab your car paperwork and take a look. Here's exactly what to look for.
Find your original sales contract
Start with the paperwork from the day you bought the vehicle, particularly your retail installment sales contract and documents covering optional products.
Look for terms such as GAP, Guaranteed Asset Protection, vehicle service contract (VSC), extended warranty, maintenance plan, tire and wheel protection, or theft protection.
If you financed one of these products, its cost may have been rolled into your loan.
Pro tip: Can't find your paperwork? Contact the dealership's finance department and request copies of your signed purchase and finance documents. Get the paperwork so you can see exactly what you bought and what it cost.
Figure out what you're paying for
Finding GAP or a service contract doesn't automatically mean you made a bad purchase. GAP generally protects borrowers if a financed vehicle is totaled or stolen and the insurance payout is less than what's still owed.
A vehicle service contract is different. It may cover certain mechanical repairs, subject to exclusions, deductibles, and other conditions.
Caribou's survey found plenty of confusion around GAP: 38% of borrowers incorrectly believe regular auto insurance automatically covers the difference between their vehicle's value and what they owe.
So don't just ask whether you have coverage. Find out what it covers, what it cost, and when it expires.
Check whether you still need GAP
GAP can be particularly useful early in a loan when you owe considerably more than the vehicle is worth. But that situation can change.
Find your current loan payoff amount and compare it with a reasonable estimate of your vehicle's current value.
If your car is worth $24,000 but you owe $31,000, GAP could potentially protect against that $7,000 difference if the vehicle is totaled depending on your policy.
If your car is worth $24,000 and you owe $18,000, it's worth reviewing whether the coverage still benefits you.
Don't cancel based solely on an online vehicle estimate. Check the terms of your particular coverage first.
Pro tip: Put a yearly reminder on your calendar called "Do I still need GAP?" As your loan balance falls, check whether you're still upside down.
Read that "extended warranty"
If you discover that you bought a vehicle service contract, find the actual contract.
Check what's covered, what's excluded, your deductible, when coverage expires, and where repairs can be performed.
Then find the cancellation and refund section.
Depending on the agreement, some service contracts may allow cancellation and a prorated refund.
Before canceling, however, make sure you understand the protection you'd be giving up. One major covered repair could potentially be worth considerably more than the remaining refund.
Find out where a refund would go
Here's an easy detail to overlook. If you financed an optional add-on and later cancel it, don't automatically expect a check.
Depending on the contract and loan, a refund could instead be applied to your outstanding loan balance.
While that can still save you money, it may not lower your monthly payment. Instead, it could reduce your balance and potentially shorten the time until payoff.
So before canceling, ask the provider exactly how much you'd receive, where the refund goes, and how it affects your loan.
While you're there, check your interest
There's one more number worth finding while you have your loan documents open: Total interest.
Caribou found 70% of borrowers know their exact monthly payment, but only 25% could recall the total interest they'll pay over the loan's life. Just 43% knew their APR.
And 38% said the total interest was higher than they'd expected.
That's why focusing solely on the monthly payment can be misleading. A longer loan can lower the payment while increasing how much the car ultimately costs you.
Posted: 2026-08-31 15:37:46
















