Does gap insurance cover downpayment on a new vehicle?

No, GAP insurance covers the "gap" between what oyu owe on the vehicle, and the vehicle's current market value. This is only for upside down loans. For example, you owe $20,000 on a car but it's only worth $15,000 and you total it, the insurance will only pay the $15,000 since they only go u to current market value. Without GAP, you would be stuck with the remaining $5,000 because once you sign that contract, that loan has to be paid no matter what. GAP would take care of the $5,000 and you would be left with $0 in the end, but you wouldn't owe money on a car you can no longer drive either.