Whether you own your automobile or have it financed through a buy here pay here dealership or another third party, the state in which you live determines your auto insurance requirements. In North Carolina, where AutoMax is based in the Research Triangle area, drivers who are still paying off a car must have two forms of auto insurance. Liability and comprehensive (collision) insurance are required for all drivers.
While most traditional-financed vehicles are required to have full coverage auto insurance, AutoMax has a special buy here pay here car insurance program through one of our trusted partners. This insurance meets the state’s minimum requirements while also saving you money on premiums. It’s known as Collateral Protection Insurance, or CPI, and you may get it when you sign the paperwork on your new buy here pay here car from us. Let’s take a look at the different forms of auto insurance you have to choose from so you can make an informed decision about how to protect your investment.
The Purpose of Basic Auto Liability Insurance on a Buy Here Pay Here Car
Basic auto liability insurance is the first sort of coverage that drivers of pay here buy here cars must have. In the event of an auto collision, basic auto liability insurance does not cover the expense of any damage to your own vehicle or your own bodily injury. It does, however, cover any damage to another vehicle or a stationary object.
Basic liability insurance will not suffice if you wish to repair your vehicle after an accident. You’ll have to come up with the money to pay for your car’s repairs or your medical bills on your own.
The damage done to any other person or vehicle involved in the accident is covered by basic auto liability insurance. As a result, if you have an accident with another car, your insurance will cover the other vehicle and driver. Basic auto liability coverage is necessary to have at least this amount in order to protect other drivers on the road in the event of an accident. This is also why basic liability insurance on a pay here buy here car is required in the Raleigh, North Carolina area.
Collision and Comprehensive Coverage for Used Cars
If you’re still paying off your automobile, especially those financed through buy here pay here car lots, collision or comprehensive insurance is a must-have. This coverage covers your vehicle in case of a collision. When did you back into a pole by accident? Covered. Is your garage slamming in front of you once more? Covered. Have you ever side-swiped the petrol pump? Covered. Accidents happen, but collision insurance will help protect you in the event that one occurs. If you have comprehensive or collision insurance, you can rest assured that you and your vehicle will be protected in the event of an accident.
Theft, hail, animal damage, vandalism, falling objects, and other perils are all covered under comprehensive coverage. In most cases, comprehensive and collision insurance are purchased together. When acquiring a buy here pay here automobile, both are required until the vehicle is entirely paid off. The disadvantage is that this insurance premium might be expensive, particularly if your driving record isn’t perfect. CPI insurance is an option offered by Auto Max that might save you a lot of money.
Collateral Protection Insurance from AutoMax
When you buy a car from a pay here buy here dealership, you have the option of getting collision and comprehensive coverage from your third-party insurer, or buying CPI to go with your basic liability insurance, which you’ll need to get from an insurance provider as well.
CPI is a type of insurance coverage that AutoMax offers in-house through one of our trusted partners. CPI insurance does not check your driving record before offering you coverage, much as a buy here pay here vehicle lot does not consider your credit history. Instead, you can get a monthly flat fee of $89 for a year.
As a result, even if you have a bad driving record, your vehicle insurance premiums will not go up. Traditional insurance alternatives reward excellent drivers with lower monthly insurance premiums, while those with a history of infractions are penalized every time a premium payment is due. Another advantage of buying CPI through AutoMax is that you don’t have to send in a separate payment because you can pay your monthly premium with your monthly car payment.
CPI coverage is the same as purchasing both collision and comprehensive coverage, and it covers damage to your car caused by your driving error or unforeseen natural disasters. CPI comes with a $500 deductible as standard, which might vary based on the policy level you choose with traditional insurance. This implies that if your car is damaged (whether from an accident or a comprehensive claim), you’ll be responsible for the first $500 in repair costs, but the CPI coverage will cover the rest.
Bottom Line: You Must Have Insurance Coverage
Our pay here buy here auto lot, like any other sort of financed vehicle, requires insurance coverage to maintain your driving legal and your car on the road. Liability and collision and comprehensive coverage, or liability and CPI coverage, are both required. The good news is that you have options, and the insurance coverage offered by Auto Max is typically less expensive than the full-coverage protection required by traditional financing methods.
To explore your buy here pay here used car insurance alternatives, contact our team of specialists immediately.
Do Used car loans require full coverage insurance?
The Facts on Buying a Used Car Whether you’re buying a used or new car, the auto loan term agreements will determine how long you’ll have to pay a lender before receiving the title. In this instance, full coverage insurance is usually necessary for the entire 36-month length of the finance period.
Do dealerships require full coverage insurance?
If you don’t keep full coverage on a financed car, you could be held liable for the entire cost of the vehicle if it is stolen or damaged in an accident. If you don’t keep complete coverage on your financed car, you risk losing it to the lender with whom you made a contract.
Almost many lenders require drivers to have full coverage auto insurance when they first finance a vehicle. Lenders normally require complete coverage for the duration of the loan, which is usually stipulated in the contract. The full coverage requirement is imposed by auto lenders because they want the automobiles they finance, which are technically still their assets, to be insured with the highest level of insurance coverage possible so that they may recover the vehicle’s value in the event of an accident or theft.
You’re likely in breach of your contract if you don’t keep full coverage on a financed vehicle, whether you miss payments or terminate the policy on purpose. Your insurance company or the DMV may notify the lienholder (lender) of the change, at which point your lender has the legal authority to cancel your contract, demand full repayment, or even repossess the vehicle.
If your lender discovers that you are not maintaining full coverage on a financed car, it may contact you to provide you the opportunity to reinstate it. If you don’t do this, your lender may acquire auto insurance for the vehicle and add it to the cost of your loan, a process known as “forced insurance.” These policies are usually quite costly.
In the end, keeping full coverage on a financed car until you purchase it fully is the best option. Then, as long as it meets your state’s minimum requirements, you can choose the level of car insurance coverage you want.
Can you buy a car without full coverage insurance?
Yes, everyone who finances a vehicle is required to carry full coverage auto insurance for the duration of their loan. Any car with a balance due on the loan is still theoretically owned by the lender. To protect their investment, lenders need consumers to have full coverage auto insurance.
Can you get minimum coverage on a financed car?
For a financed car, banks and lenders typically require minimum coverage in the form of a full coverage policy that includes comprehensive, accident, and liability insurance. This strategy enables the financing business to safeguard its asset, the car, which serves as collateral for the loan.
Can you have only liability insurance on a financed car?
No, in most cases. You don’t want to be held liable just because the vehicle isn’t adequately insured. Financing businesses require this since you owe money on the automobile and they need their loan covered, and if something went wrong and you only have liability, you’d be responsible for the entire loan and would be without a car.
What happens when you total a financed car without insurance?
If your car is totaled in an accident and you haven’t paid off your loan, your alternatives will usually be limited to the following:
If You Have Insurance
When you finance a car, most lenders require you to purchase auto insurance. When your automobile is totaled, however, the coverage your lender requires may not be enough. Why? Because the amount you owe on your loan is irrelevant to insurance companies. They only compensate you for the ACV of your automobile at the time of the accident. Because cars depreciate (lose value over time), your insurance settlement could be thousands of dollars less than your loan balance.
Let’s say you spin out and slam into a stop sign. Your vehicle has been declared totaled. Your car’s ACV is $8,000, but you still owe $10,000 on your loan, according to the insurance company. Your lender will receive a $8000 check from the insurer. Even though your automobile is totaled, you must still pay the remaining $2,000 on your loan. (Learn how gap insurance can shield you from this financial risk in the section below.)
If the ACV of your automobile is higher than the amount you owe on your loan, the insurer will pay off your loan first and give you the remainder of the settlement check. If your car’s ACV is $8,000 and you owe $2,000, the insurer will pay $2,000 to your lender and $6,000 to you.
Check out The Insurance Company Says My Car is a Total Loss What Now? for advice on what to do if you disagree with your insurer’s car valuation.
If You Don’t Have Insurance
In most states, driving without insurance or other proof of financial capability is illegal. And you won’t be able to receive a car loan if you don’t have insurance. If you total your financed car in an accident while driving without insurance, you’ll have to keep making loan payments until the loan is paid off. You’ll also be responsible for all accident-related costs (medical bills, property damage). You may be sued if the accident affects another driver or someone else’s property. Driving without insurance can result in the loss of your driver’s license as well as a costly punishment.
If The Other Driver Is at Fault
Let’s say you’re stopped at a stoplight and a car rear-ends you. You may be able to file a claim with the other motorist’s insurance carrier if the other driver is at fault (provided you aren’t dealing with an uninsured driver). A “third-party insurance claim” is what this is referred to as. An insurer will only pay out the ACV for a totaled car, whether you’re dealing with the other driver’s or your own.
What Is Gap Insurance?
The difference between your car’s ACV and the amount you owe on your loan is covered by gap insurance (short for “Guaranteed Auto Protection”). Gap coverage is usually purchased through your automobile loan lender or insurance company.
Gap insurance isn’t inexpensive, and you only need it if you owe more than the value of your automobile. If you’re looking for a way to bridge the gap between your current and future income, gap insurance could be beneficial.
Let’s pretend you’ve totaled your sports automobile. Your car’s ACV is $25,000, but you still owe $35,000 on your loan, according to the insurer. The $10,000 discrepancy between your car loan balance and the insurance settlement check can be covered by gap insurance.
What happens if you don’t pay insurance on a financed car?
Every automobile owner is aware that purchasing and maintaining a vehicle is costly. If you’re financing a car on a tight budget, you might be wondering if you can drive it without insurance, but we don’t advocate it on a financed vehicle.
What is considered full coverage insurance?
Liability plus comprehensive and collision is how many lenders, agents, and car dealerships define “full coverage” auto insurance. Your lender may use the term “full coverage,” but it simply means that you must have comprehensive and collision coverage, as well as whatever your state requires.
Registering your new car
The initial step should be to register your new vehicle. If you’re buying from a dealership, this will very certainly be done in person at the time of purchase. If you’re buying from a private seller, however, you’ll have to take care of it yourself.
“Once you’ve discovered a vehicle you wish to buy, the following step is to register the vehicle,” blogger Off Track Travel explains. A V5C, which is the vehicle’s registration document, will be in the possession of the vehicle’s owner. It contains all of the vehicle’s information as well as the owner’s address.
“Needless to say, if the owner’s name and address do not match, do not proceed!”
In order to receive their own, the buyer must additionally complete a part on the form. “All being well, there is a small area on this form (‘new keeper’s details’ – V5C/2) that you, as the new owner, will need to fill out and maintain, as this is your temporary proof that you own the car until the new V5C is issued to you,” Off Track Travel adds. To tax the vehicle, you’ll need the V5C/2.”
MOT/Service needs
When purchasing a new car from a dealership, it is essential to clarify the vehicle’s MOT and service requirements. Even though you won’t need a MOT for another three years, it’s always a good idea to schedule a regular service to ensure everything is in working order. Some dealerships even offer service packages that you may purchase alongside the vehicle, which can save you money on future repairs and inspections.
If you’re buying a pre-owned automobile from a dealership, talk to your salesperson about when the MOT is due and when the next service is due so you don’t get any unpleasant surprises.
When buying a car from a dealer, it’s also a good idea to find out where the automobile will be serviced. It’s up to you whether you want to use the manufacturer’s service choices or take it to a private garage, but now is a good time to learn about your possibilities. Also, taking a car to a repair who isn’t registered with the manufacturer can void the warranty.
When buying a car privately, it’s also critical to be aware of these dates before finalizing the transaction. When it comes to knowing more about a car’s MOT and service history, AutoTrader has these suggestions:
“Ask to see the car’s service history, any work records, the owner’s manual, and, if applicable, its MOT certificates. This will not only reassure you that the automobile has been well-maintained, but it will also show that the mileage is accurate and that there are no reoccurring issues. The car’s MOT status and history can both be checked online, albeit a thorough history report will set you back a few pounds.”
Although you should typically have plenty of time before a MOT is required, if one is required soon, getting it scheduled as soon as possible is essential.
Tax the vehicle
Taxing your vehicle is a simple procedure that must be completed before driving away. It may even be taken care of for you in the shop if you buy from a dealership. Alternatively, you’ll have to tax it before bringing it home.
If you’re buying a previously taxed car from a private owner, keep in mind that road tax does not and cannot be transferred, therefore you’ll have to tax the vehicle before driving away.
Taxing your automobile is simple to do online or by calling the DVLA. You should receive an email confirmation after your vehicle has been taxed.
If I’m tax-exempt do I still need to tax my vehicle?
Even if you are tax-exempt, such as due to a disability or because your vehicle is an electric vehicle, you must still tax your vehicle; you will simply not be charged.
Getting temporary insurance on a new car
It’s only natural that once you’ve acquired your new wheels, you’ll want to get them home. You’ll need insurance whether you buy from a dealership or a private seller, and waiting for annual insurance to be set up can be time consuming.
Short-term vehicle insurance, often known as day insurance, allows you to drive your car home before committing to a year-long policy. This is ideal for private sales if the buyer wants to clear space on their driveway for a new vehicle because it can be set up in minutes and allows you to drive away quickly.
Can I drive a new car without insurance?
Even if you’re only returning your new car from the dealer, you’ll need insurance for the journey. You must be fully insured whenever you drive any vehicle. Even if it’s only a five-minute drive, it’s critical to be covered since you never know what can happen on the road.
It is feasible to set up annual insurance on a new vehicle, but many people choose to switch insurance providers when purchasing a new vehicle, and the procedure can take some time. By bridging the gap with temporary vehicle insurance, you’ll be able to drive your automobile off the lot and into your home before making that decision.
Temporary insurance can last anything from an hour to a month, so you can be protected whether you only need to drive the car home or want to be covered for a longer amount of time while you get an annual policy in place.
Does the type of insurance I get change if I bought from a private seller?
Whether you purchase your vehicle from a private seller or a dealership, you will require the same level of protection. It doesn’t matter if the car is brand new or has 100,000 miles on the odometer; you won’t need any special insurance.
What if I get someone else to drive the car home?
Even if you have an annual policy in place, there may be times when you need someone else to drive the car home. Whether it’s simply more convenient for your work schedule, or the vehicle is being sold far away from home and you need to share the driving to get it back, temporary insurance can ensure that another person is protected for the trip.
You’ll be showing off your new wheels to friends and family in no time if you follow these four simple steps. If you’ve just bought a new car and need insurance right away, our temporary coverage may be set up in as little as 15 minutes and start as soon as an hour, making it ideal for bridging the gap between the sale and your annual policy.
Do insurance companies go after uninsured drivers?
Uninsured motorist coverage is a type of insurance that protects you against losses incurred by an uninsured or hit-and-run driver. Uninsured motorist coverage is divided into two categories:
Uninsured motorist coverage cannot normally exceed the amount of your personal liability coverage.
For example, if your liability coverage is $50,000, your uninsured motorist coverage must be $50,000 or less. Your uninsured-driver coverage, on the other hand, will only pay up to $50,000 in damages if the uninsured motorist is at fault.