Can a Lender Exchange a Car on Your Car Insurance For You?
Buying a new car is an exciting time and there is a lot to consider. You have decided on the perfect car, you are happy with your interest rate and the length of the loan, the car payment fits perfectly in your carefully laid out budget, but have you considered car insurance? Getting caught up in the details of the new car loan can easily lead a buyer to forget all about a potential car insurance rate increase. It is an important factor to think about when you are in the midst of the car buying process.
It is possible for a loan officer to call on your behalf to make a change to your car insurance. Typically the agent will ask to speak with you to verify you are in fact requesting the change. It is not unheard of for an agent to process the change without ever even speaking to you. The lender relays the info to your agent and you will soon receive the paper work in the mail stating the changes to your policy. Lots of dealers or loan officers think they are doing you a favor by updating your car insurance policy on your behalf.
However, it is important you personally verify the change was made properly and find out how much it is going to cost.
Things to Keep In Mind About Car Insurance When Buying a New Car
- A financed new car purchase always requires full coverage car insurance by the lender.
- Going from a liability only car insurance policy to a full coverage policy can be very expensive.
- Even upgrading a vehicle and keeping the same coverage could result in a rate increase.
- The loss payee needs to be added to the policy as soon as possible.
- Gap insurance may be a good option, it is often cheaper to add it to your car insurance policy verses adding it onto your car loan.
Cars are large expenses and require a lot of planning. You do not want to go through the whole car buying experience and put yourself in a situation where you cannot afford the new purchase. Call your car insurance agent for a quote before sitting down to sign paperwork on a new car loan. Starting your search all over again is an option when you realize you can not afford all aspects of the new vehicle, but planning ahead is clearly the best option. It is a mistake to allow the lender to make the change for you because you may not get the coverage you want or know how much it costs.
At the very least, speak with your agent after your lender gives the agent all the pertinent information like the new car's VIN and loss payee information. Take the time to ask about coverage options, deductible limits, gap insurance, and reducing coverage on any of your older vehicles to help cover the cost. Ask your agent to review your policy for discounts. Now is the best time to make the request because it is on your mind. Putting it off for later may result in not having coverage you need at the time of a loss.
Insurance is not something you can procrastinate on.
Ask about when the change to your car insurance is going to hit your billing cycle. If you have a payment due within the next week, you will likely be hit with two solid months of rate increase all wrapped up in one bill. It is something to consider if you are spending all of your savings on a down payment for the new car. Car insurance billing cycles can be confusing for many people. Making a larger payment on your current car insurance bill will most likely offset the cost for the upcoming month.
Car Insurance Prices Can Vary Greatly Based on the Vehicle You Select
Getting a quote on several vehicles ahead of deciding on which car to buy can be helpful in narrowing down which car to purchase. Do not put it off until the last minute. A hybrid could be so much more to insure, it wipes out your fuel savings. Safety features are way more beneficial to your car insurance costs than fuel efficiency.