How Financing Your Car Affects the Insurance Premium

LAS VEGAS - July 14, 2020 - PRLog -- Few buyers can purchase a new vehicle without financing it. The good news is that financing your vehicle does not directly affect your auto insurance rate, meaning that 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. If you make payments on your vehicle, your lender requires you to have comprehensive and collision coverage on top of the state minimum requirements. Plus there may be postage to the lender to communicate proof of coverage to them.

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. 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.

Read the full article: https://www.nevadainsuranceenrollment.com/financing-your-...

Learn more: https://www.nevadainsuranceenrollment.com/auto-insurance-...

Nevada Insurance Enrollment
4260 W. Craig Road suite #150-A
North Las Vegas, NV 89032
(702) 898-0554
Website: NevadaInsuranceEnrollment.com