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Direct answer: Usually, yes. When you pay off, refinance, trade in or sell a financed car early, the unused part of a GAP contract is generally refundable, and most service contracts can be cancelled for a prorated refund. Refunds often aren't automatic: send a written request to the administrator or dealer with your payoff letter, and keep a copy.
By the numbers: In CFPB v. USASF Servicing, a federal court accepted findings that the servicer failed to refund at least $4 million of unearned GAP charges and interest to an estimated 5,600 borrowers who paid off early. Source: CFPB v. USASF, opinion and order, Aug. 28, 2024
“Also, you may be entitled to a refund if you sell, refinance, or prepay your auto loan.” — Consumer Financial Protection Bureau, What is GAP insurance? (reviewed Mar. 8, 2024)
Updated 2026-10-16
Generally yes. GAP can't pay anything once the loan is gone, so the unused part is refundable. The CFPB says that on an early payoff the full refund should go to the borrower. Ask the GAP administrator in writing, with your payoff letter.
Usually. The trade-in pays the old loan off, which ends the GAP. Ask the dealer's finance office for the cancellation form that day, or write to the administrator with the payoff date.
Usually yes. Most service contracts can be cancelled: a full refund in an early window (Texas: 30 days; California: 60), then a prorated refund minus a capped fee. Your contract's cancellation section has the method.
Not always. In the USASF case the servicer asked for payoff refunds only when the borrower requested one, and Tennessee law requires a written request within 90 days. Send one.
The administrator named in the contract, often through the dealer that sold it. If the loan is still open the money can go to the lender to lower your balance; if it's paid off, it should come to you.
California gives the holder 60 business days. Texas service contract refunds are due before the 46th day after notice. Elsewhere, check your contract; CFPB examiners found refunds applied 84 days late on average.
As of Oct. 16, 2026
Use the numbers on your contract (the price is on the contract or the buyer's order). Nothing you type is sent anywhere.
Fill in what you have; the letter updates as you type. Copy it into an email or print it, and keep proof you sent it.
Send a written cancellation and refund request for every add-on the day your loan ends, with the payoff letter or lien release attached, and ask that the refund be figured as of the payoff date. The payoff check the dealer or new lender sends your old lender doesn't cancel anything by itself.
The math:
Sources: CFPB Supervisory Highlights 35 · CFPB: GAP · Tenn. Code 56-59-106 · Cal. Civ. Code 2982.12 · Texas TDLR
A best fit for the situation described, not financial advice or a buy/sell recommendation. Partner links never change a pick.
| Situation | GAP | Service contract |
|---|---|---|
| Paid the loan off early | Ends. Unused part refundable; on a payoff the CFPB says it should all go to you. | Still covers the car. Keep it, or cancel for a prorated refund. |
| Refinanced | The old GAP ends when the old loan is paid. Buy new GAP for the new loan only if you want it. | Keeps going unless you cancel. |
| Traded in | Ends at payoff. Ask the dealer's finance office for the cancellation form that day. | Cancel for a prorated refund, unless the contract lets you transfer it (FTC: ask about a transfer fee). |
| Sold it yourself | Ends when the loan is paid off from the sale. | Cancel, or transfer it to the buyer if the contract allows. |
| Totaled or stolen | Pays its benefit; California says no refund is owed then. | Has no value once the car is a total loss: the unused part should be refunded (CFPB). |
| Repossessed | Refund should be applied to what you still owe; any extra goes to you (CFPB). | Same: credited against the deficiency balance (CFPB). |
| Keeping the car, just cancelling | Depends on the contract (Tennessee lets GAP be non-cancellable after the free look; California lets you cancel any time, no fee). Money goes to the loan. | Allowed under most state rules below; with a loan open, the refund usually lowers the balance. |
Sources: CFPB Supervisory Highlights 35 · CFPB: GAP · Tenn. Code 56-59-106 · Cal. Civ. Code 2982.12 · FTC
| State | Product | Rule | Source |
|---|---|---|---|
| Tennessee | GAP waiver | Refund of the unearned part after the free look unless the waiver says otherwise; written request within 90 days of the payoff; may go to the lender unless the loan is paid in full. | Tenn. Code 56-59-106 |
| California | GAP waiver | Ends at payoff. Within 30 days: full refund plus its finance charges. After: pro rata by calendar days. Holder must pay or instruct within 60 business days. Cancel any time; no fee. Price capped at 4% of the amount financed. | Cal. Civ. Code 2982.12 |
| California | Service contract | Full refund within 60 days (30 for a used car with no manufacturer warranty) if no claim; partial after; fee up to the lesser of $25 or 10%. | California DOI |
| Texas | Service contract | Cancel any time. Before day 31: full refund minus claims, no fee. After: prorated minus claims, fee up to $50. Paid before day 46, or 10% a month penalty. | Texas TDLR |
| Washington | Service contract | No claims: full refund within 9 days (no fee) or 10–30 days (fee up to $25); after 30 days prorated, fee up to $25. | Washington OIC |
Other states have their own GAP and service-contract laws we haven't verified yet; the calculator says so when that's the case. Your contract's cancellation section always applies too.
Sources: CFPB Supervisory Highlights 35 · CFPB v. USASF · CFPB blog. Supervisory findings describe unnamed companies; they're not new rules.
Sources: FTC · Texas TDLR · California DOI · Washington OIC
From 11 years in dealership sales and management: the finance office that sold the GAP or service contract usually has the cancellation forms and can submit them the same day, so ask for them when you sign the trade-in papers. Bring the contract numbers (they're on your buyer's order). If you're financing the next car, you don't have to buy new GAP or a new contract there; you can get a GAP quote from your insurer first (see dealer add-ons).
Some contracts use other methods or count from a different date. The administrator's figure is the real one; this tells you whether it's in the right range.
Not legal advice. We summarize published rules with dates and do the arithmetic on what you type; your contract and your state's law decide.
Generally yes. GAP can't pay anything once the loan is gone, so the unused part is refundable. The CFPB says that on an early payoff the full refund should go to the borrower. Ask the GAP administrator in writing, with your payoff letter.
Usually. The trade-in pays the old loan off, which ends the GAP. Ask the dealer's finance office for the cancellation form that day, or write to the administrator with the payoff date.
Usually yes. Most service contracts can be cancelled: a full refund in an early window (Texas: 30 days; California: 60), then a prorated refund minus a capped fee. Your contract's cancellation section has the method.
Not always. In the USASF case the servicer asked for payoff refunds only when the borrower requested one, and Tennessee law requires a written request within 90 days. Send one.
The administrator named in the contract, often through the dealer that sold it. If the loan is still open the money can go to the lender to lower your balance; if it's paid off, it should come to you.
California gives the holder 60 business days. Texas service contract refunds are due before the 46th day after notice. Elsewhere, check your contract; CFPB examiners found refunds applied 84 days late on average.
Estimates, not financial advice. Taxes, insurance, PMI and fees vary by lender, county and city; confirm with your lender, dealer and state agency before acting.