Are you considering taking out a car loan? If so, you may have heard of car loan protection insurance. This type of insurance provides coverage for loan payments in the event of unexpected events such as a disability or death. In this blog post, we will discuss whether or not you need car loan protection insurance and what it entails.
What is car loan protection insurance?
Car loan protection insurance, also known as vehicle finance protection insurance, is a type of insurance policy that helps to protect borrowers from financial difficulties caused by death, disability, or involuntary unemployment. It is specifically designed to help borrowers keep up with their car loan payments in case of an unexpected change in circumstances. The coverage typically covers the remaining balance on the car loan for a certain period of time, allowing borrowers to continue making payments on the loan without interruption. This type of insurance provides peace of mind and protection from costly financial burdens due to unexpected circumstances.
How does it work?
Vehicle finance protection insurance is a type of insurance policy that helps to protect you if you are unable to make your car loan payments due to death, disability, or involuntary unemployment. In the event of a covered loss, the insurance company will pay the outstanding balance of your loan, up to the limit of your policy. For example, if you were to suffer from a disability and were no longer able to make your car loan payments, the insurance company would pay off the remaining balance of the loan up to the policy limit. Similarly, if you were to lose your job due to an involuntary layoff, the insurance company would pay off the outstanding balance of your loan.
It’s important to note that vehicle finance protection insurance does not cover other costs associated with your car loan such as missed payments or late fees, so it’s important to make sure you keep up with your loan payments even if you have this type of coverage.
Who needs it?
Car loan protection insurance, also known as vehicle finance protection insurance, is an important tool for people who are financing the purchase of a car or other vehicle. If you have taken out a loan to purchase a car, it is important to consider taking out this form of insurance to protect you in the event that you cannot make your loan payments due to life circumstances.
Car loan protection insurance provides coverage against job loss,
This means that if you are suddenly unable to work due to a disability or job loss, or if you pass away, your loved ones will not be responsible for making your car loan payments. This type of insurance can provide peace of mind knowing that you and your family will be protected if the unexpected happens.
How much does it cost?
The cost of vehicle finance protection insurance will depend on the individual policy, but usually costs between 1% and 2.5% of the loan amount. For example, if you are taking out a loan for $25,000, the insurance could cost between $250 and $625. You may also be able to purchase a discounted policy if your lender has an agreement with the insurance provider. Additionally, some lenders may offer free or discounted policies as part of their financing packages. It is important to shop around and compare different policies before making a final decision.