Enter the total cost and the amount already paid into the calculator to determine the gap coverage. This calculator helps to identify the remaining balance that needs to be covered.
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Gap Coverage Formula
The following formula is used to calculate the gap coverage.
GC = TC - AP
Variables:
- GC is the gap coverage (USD)
- TC is the total cost (USD)
- AP is the amount already paid (USD)
To calculate the gap coverage, subtract the amount already paid from the total cost.
What is Gap Coverage?
Gap coverage is the amount that remains to be paid on a loan or debt after accounting for payments already made. It is often used in the context of auto loans or insurance, where it refers to the difference between the actual cash value of an item and the balance still owed on the financing. Gap coverage is important for ensuring that a borrower or insured party is not left with a financial deficit in the event of a total loss.
How to Calculate Gap Coverage?
The following steps outline how to calculate the Gap Coverage.
- First, determine the total cost (TC) of the item or service.
- Next, determine the amount already paid (AP) towards the total cost.
- Use the formula GC = TC – AP to calculate the gap coverage.
- Finally, calculate the Gap Coverage (GC) in USD.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Total cost (TC) = $25,000
Amount already paid (AP) = $10,000
