Buying automobiles with loans may be the only solution for many people to buy the car they want. Usually, lien holders have special insurance conditions to be followed before the loan is released. They require proper coverage for the vehicle and usually for the loan as well. This would mean buying Comprehensive, Collision and Gap Insurance on top of liability coverage. There is nothing wrong with buying decent level of insurance for a financed car but it could be expensive.
How to Reduce Insurance Cost when You Have a Car Loan?
It is common practice for many dealerships to arrange the finance and insurance for customers. If this was the case and you went with the coverage recommended by an agent known to the dealership it may be that they didn’t shop around enough for you. You may be able to shop around again when the policy is due for renewal. You wouldn’t normally have any problem with switching auto insurance companies as long as you keep the coverage required by your lender.
you can get alternative quotes and see if they would help in bringing your costs down. So, you have an option to lower the burden a bit by getting the same coverage somewhere else. Regardless of having auto loan or not, you should often check that your premium is competitive. This is especially true when your rates keep going up. It is not rude to ask your insurer why does my car insurance keep going up? And it is alright to check for better coverage or price, in any case.
Would Lien Holder Allow to Drop Car Insurance Coverage?
If you have a loan on the car your lien-holder’s interest has already been noted on the policy. They would be informed if you drop Collision and Comprehensive Coverage (and Gap insurance if you have). They would want you to re-instate the cover or they would arrange a forced policy that would be much more expensive for you to pay. It would not be advisable to drop these covers. One thing you need to understand is that the car is now yours and these covers protect your financial loss, not only loan provider’s. Regardless of you still owning the car or not you will have to pay for the loan if it is not paid by the insurance money.
You may try to increase the deductibles to $1,000 and see what happens if you really want to do something. There is a chance that the lenders may leave you alone and not bother with this change to the policy. If they do, they would contact you and ask to bring it down to $500 again. Then, you could take up with them and show them your bank statement with more than $1,000 readily available cash if you need to pay for deductibles. They may be convinced that high deductibles wouldn’t be an issue in your case.
If you have arranged an auto loan several years ago why not revisit and see where you are at. If you can manage to pay off the loan it my be time to think about when to drop collision insurance and comprehensive. Paying off auto loans early could save you money on loan interest and vehicle insurance. You can always get a quote for the level you think is right and see the difference in premium with loan and without loan.