The right time to cancel your gap insurance policy is when the amount you owe on your car loan or lease is less than the actual cash value (ACV) of your vehicle, which typically occurs after a few years of regular payments and depreciation levels out. This usually happens when you have positive equity in your vehicle, meaning if it were totaled or stolen, your auto insurance payout would fully cover your remaining loan balance. You should also consider canceling if you’ve paid off your loan early or refinanced without a need for gap coverage. Before canceling, confirm your car’s current value and loan balance, and check your gap policy’s refund terms, as some providers offer prorated refunds. Always consult your lender or insurance company to avoid penalties or coverage lapses. Canceling too early may leave you financially vulnerable, while waiting too long could mean paying for unnecessary coverage.