What Affects Your Auto Insurance Rate?
Few buyers can purchase a new vehicle without financing it. The good news is, financing your vehicle does not directly affect your auto insurance rate, meaning you are not penalized for taking out an auto loan instead of buying the car outright.
However, you may end up paying a higher premium than someone who has not financed their vehicle, simply because the lender has specific requirements. If you make payments on your vehicle, your lender requires you to have comprehensive and collision coverage on top of the state minimum requirements. But typically, if you buy a new car, you would add these coverages on yourself. It’s not as obvious when the vehicle in question is older and the value is much lower.
Why Lenders Require Full Auto Insurance Coverage
After you sign all those papers and get the keys to your new vehicle, you think of it as yours. However, your lender has a different perspective. As far as they’re concerned, they paid for the vehicle, and until you pay off the car loan completely, it’s still theirs. Therefore, it’s in their best interest to ensure that if the car is totaled in an accident, they won’t suffer a loss.
If you get into an accident with only state minimum coverage, your auto insurance policy covers damages to the other driver’s vehicle. However, your vehicle wouldn’t be covered by your policy. This means that if your car is totaled (the cost to repair the vehicle is greater than the vehicle’s value), your lender would be out the money.
To protect their investment, lenders require that you have comprehensive and collision coverage. This ensures that if your vehicle is damaged, your auto insurance company will pay for repairs, or if it’s totaled, the lender would receive the money needed to pay off the loan.
What Happens If Your Auto Insurance Coverage Lapses
Letting your auto insurance coverage lapse is never a good idea, and more importantly, it’s also illegal. If you get into an accident with lapsed coverage, you could end up paying thousands of dollars out of your own pocket to cover damages to your vehicle, the vehicle you hit, and any injuries that resulted. Once you get coverage again, you’ll probably pay a higher premium.
When you have an auto loan, coverage lapses cause an even bigger hassle. Once again, your lender wants to make sure that your vehicle is in good condition and can be returned to pre-loss condition if it’s in an accident. If you make changes to your auto insurance coverage, such as if you add or drop optional coverage or raise or lower your policy limits, your auto insurance carrier notifies your lender.
Your lender is also notified if you skip your auto insurance payment. If that happens, they can place a third-party auto insurance policy on your vehicle. Worst case scenario, they can legally take back your vehicle.
Understanding Auto Loan Basics Can Help Save Money
Purchasing a new vehicle is a big deal. Aside from a home loan, an auto loan is the biggest chunk of money that most people will borrow at one time. However, not all auto loans are the same; interest rates and payment terms vary widely and have a big impact on how much your vehicle actually ends up costing you. Understanding how a few factors affect how much of a loan you can get (and how long it takes to pay back), before you set foot on a car lot, can help you make a decision that you won’t regret.
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What Is a Health Insurance Carrier?
A health insurance carrier provides plans to cover medical expenses, like doctor visits and prescription medications. Understanding your insurer’s network, plan types (HMO, PPO), and costs (premiums, deductibles) is key to choosing coverage. In Nevada, carriers collaborate with Nevada Health Link to offer ACA-compliant plans, ensuring access to preventive care and essential benefits. Learn how to select a dependable health insurance company and manage costs effectively.
What is a Prescription Drug Deductible?
In the world of health insurance, “deductible” is a common word. It refers to an amount of money that you pay out of your pocket before the insurance company begins to pay. A prescription deductible is the portion you’d pay first, then after you’ve paid the deductible, you may only have to pay a co-pay when you pick up your medication.
If you are single, you would only have to meet your prescription deductible. If you have two or more people in your family, each member may have to meet their own prescription deductible which could be up to 2 deductibles in the family. A prescription deductible is different and separate from the medical deductible, unless otherwise stated. One deductible is for medical, ie: hospitalization, doctors, etc., and the other deductible is for filling your prescriptions.
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Understanding Auto Loan Basics Can Help Save Money
Purchasing a new vehicle is a big deal. Aside from a home loan, an auto loan is the biggest chunk of money that most people will borrow at one time. However, not all auto loans are the same; interest rates and payment terms vary widely and have a big impact on how much your vehicle actually ends up costing you. Understanding how a few factors affect how much of a loan you can get (and how long it takes to pay back), before you set foot on a car lot, can help you make a decision that you won’t regret.
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5 Things to Consider Before You Get an Auto Loan
1). Your Credit History
If you have a high credit score (800 or above), you can expect a really low interest rate. However, if you have less-than-stellar credit, you’ll typically have a higher interest rate and higher monthly payments. In this case, you may want to consider delaying your car purchase to see if you can raise your credit score or see if you can pull together more money for a bigger down payment to lessen your loan amount.
2). Loan Repayment Terms
To lower monthly payments, some buyers opt for long loan payment plans. While an 84-month plan may have significantly lower payments than a 36-month plan, over the lifetime of the loan, you’ll end up paying more in interest. If possible, opt for the highest monthly payment that you can comfortably afford.
3). Incentives
In some cases, dealers may run specials where they give incentives for purchasing a vehicle. You may have the option of getting a very low interest rate or a cash rebate. To find out which option saves you the most money, find an online calculator that lets you compare the cash rebate option to the low interest rate.
4). Pre-Approval
For a more pleasant car buying experiences with fewer surprises, don’t wait until you’re sitting in front of the loan officer to explore your auto loan options. Shopping around for an auto loan and getting pre-approved by a lender beforehand can give you a clear picture of what you can afford. It’ll also help you negotiate the vehicle’s price.
5). Paying Back Your Loan
If you get into a bad car accident a month after you purchase your vehicle and you total your car, you’re still responsible for paying back the car loan. Unfortunately, depending on the age of your vehicle, it may have depreciated in value quite a bit since you purchased it. Adding GAP insurance to your policy covers the gap between what your vehicle is worth versus what you owe on it.
How Nevada Insurance Enrollment Can Help
If you have a new vehicle payment, it can be intimidating to think about paying a higher premium for auto insurance. Our agents can help you understand what your lender requires, what discounts you qualify for, and which auto insurance company offers the best coverage at the best price.
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Recent Posts
What is a Prescription Drug Deductible?
In the world of health insurance, “deductible” is a common word. It refers to an amount of money that you pay out of your pocket before the insurance company begins to pay. A prescription deductible is the portion you’d pay first, then after you’ve paid the deductible, you may only have to pay a co-pay when you pick up your medication.
If you are single, you would only have to meet your prescription deductible. If you have two or more people in your family, each member may have to meet their own prescription deductible which could be up to 2 deductibles in the family. A prescription deductible is different and separate from the medical deductible, unless otherwise stated. One deductible is for medical, ie: hospitalization, doctors, etc., and the other deductible is for filling your prescriptions.
Are Ambulance Rides Covered By Health Insurance?
If you have a qualified health plan (QHP) the answer is yes, ambulance rides are covered. A QHP is an insurance plan that is certified by Nevada Health Link in Nevada that covers “10 essential health care benefits” including emergency transportation. You may need to pay a deductible, co-payment, or co-insurance for your ambulance trip.
Does My Auto Insurance Policy Cover My Trailer?
You have an auto insurance policy that covers damage to your vehicle, but what if you regularly use your vehicle to pull your trailer? Does that trailer have the same coverage as your car or truck?
What Is a Qualified Health Insurance Plan?
A Qualified Health Plan, or QHP, is a health insurance plan that provides coverage for the 10 essential benefits outlined in the 2010 Affordable Care Act. Qualified Health Plans MUST cover these 10 items without any lifetime or annual limits on these “Essential Health Benefits.”
What is a Prescription Drug Deductible?
In the world of health insurance, “deductible” is a common word. It refers to an amount of money that you pay out of your pocket before the insurance company begins to pay. A prescription deductible is the portion you’d pay first, then after you’ve paid the deductible, you may only have to pay a co-pay when you pick up your medication.
If you are single, you would only have to meet your prescription deductible. If you have two or more people in your family, each member may have to meet their own prescription deductible which could be up to 2 deductibles in the family. A prescription deductible is different and separate from the medical deductible, unless otherwise stated. One deductible is for medical, ie: hospitalization, doctors, etc., and the other deductible is for filling your prescriptions.
Are Ambulance Rides Covered By Health Insurance?
If you have a qualified health plan (QHP) the answer is yes, ambulance rides are covered. A QHP is an insurance plan that is certified by Nevada Health Link in Nevada that covers “10 essential health care benefits” including emergency transportation. You may need to pay a deductible, co-payment, or co-insurance for your ambulance trip.
Does My Auto Insurance Policy Cover My Trailer?
You have an auto insurance policy that covers damage to your vehicle, but what if you regularly use your vehicle to pull your trailer? Does that trailer have the same coverage as your car or truck?
What Is a Qualified Health Insurance Plan?
A Qualified Health Plan, or QHP, is a health insurance plan that provides coverage for the 10 essential benefits outlined in the 2010 Affordable Care Act. Qualified Health Plans MUST cover these 10 items without any lifetime or annual limits on these “Essential Health Benefits.”