Although there are some people out there who pay for cars with cash or their own personal credit, most people buy cars using bank or dealer financing. If the interest rate is low, this can be a easy and convenient way to purchase a vehicle. However, financing a vehicle brings different insurance challenges that you need to be aware of when searching for auto insurance quotes.
If you own your car, you are the only one that loses money in the
case of an accident. If you are financing a car, the bank owns your
vehicle until you are finished making payments. If you buy a car and
the next day it gets totaled, the remaining amount on the loan is not
going to get paid through your payments. This is where insurance comes
in. When getting a loan for a car, it will be necessary for you to
provide proof of sufficient insurance coverage before the car can be
taken home. The vehicle will need to be insured for the entire time you
have the loan, and the lender has the right to take the car back if at
any time they find out you are not carrying sufficient coverage.
Coverage requirement for leased cars and auto insurance quotes
Additionally, there are certain coverage requirements, set by the
lender, which you will need to meet. The specifics will depend on the
lender, but most will require a certain amount of uninsured/underinsured
motorist coverage, collision coverage, and sometimes comprehensive
coverage. These requirements often exceed those required by the state
you live in. Therefore, before purchasing a new car, you might want to
check the auto insurance quotes to see how much a particular car will
cost you. You can also shop around to find insurance companies will provide you the most coverage
for the least amount of money. When you are ready to purchase your
vehicle, make sure you have proof of insurance with you. Sometimes, you
can use the policy for your old vehicle for a certain amount of time,
until you can go home and add the new vehicle to the policy. It is
completely up to you to have proper coverage.
Lenders have higher coverage requirements then state law because they
need to protect themselves and their property investments. This might
be annoying for someone who doesn't want to purchase insurance in the
first place, but it will be much cheaper for you to have insurance than
for you to pay for the vehicle in full if you get into an accident.