Loan Insurance

Auto insurance is not required to get a car loan. Insuring your car is mandatory in most states not before the bought. Almost every lending institution requires you to have car insurance before they give you an auto loan. The law may not require you to have insurance before applying for an loan, a lending institution will.

If you stop paying the required auto insurance coverages from a financed vehicle, it is a violation of your contract and may put your loan in risk. The lender could place single interest coverage on the vehicle and add the premium to the loan. This type of coverage is wise and does not provide any coverage for you, just the lender.

Lien holders require full coverage since the car is their asset. When you wreck and you do not have insurance to cover it, they will have to come after you. It is smart to have auto loan insurance.