Insurance-Auto-Loan

 This is known as "full coverage" auto insurance and will be required on any vehicle that you do not own, until the loan is paid off and the lien is removed. Then, you will be able to downgrade your insurance to the state minimum if you choose to do so. Comprehensive and Collision will cover anything cosmetic that happens to the vehicle as a result of a wreck and may cover some acts of God. The insurance coverage will not cover any mechanical damage to the car.  In some cases, it will cover the cost of towing and a rental car while repairs are being made, but these are additional features you can choose to purchase. The amount of coverage will have to be enough to completely replace the vehicle should it be totaled for any reason.


When you purchase insurance coverage, you will be given a choice of deductibles, which is how much you will pay out of pocket before the insurance company will pay the rest of the bill. Generally, most lenders allow for a $500 deductible to help keep your premiums low, but you may choose to have a lower deductible or no deductible at all if you are willing to pay a higher premium. This coverage will also cover damage to another person's vehicle if you are in a wreck that is deemed your fault.

some auto financing companies may require that you purchase GAP insurance. Though most don't plan on having their cars get totaled, it does happen--and being upside down in a car loan, owing more than the vehicle is worth, happens a lot because of the high depreciation rate on cars. This kind of insurance is generally around $500 per policy and is worked into the amount financed, which means you will pay for it over the course of your vehicle payments. In the event your vehicle is totaled and your insurance company pays less for your car than what you owe on the loan, the GAP insurance comes in and pays the difference, so the loan for the car is completely paid off and you are not stuck paying on a loan for a car you no longer own, just to keep your credit from going down the tubes.

While you will be instructed by the state and your lender as to how much coverage to purchase, the deductible will be your choice, which can help keep your premium lower. Once your car is paid in full, it will be at your discretion to continue the collision and comprehensive car insurance coverage or to cancel it and maintain only liability.

The amount of car insurance you are required to have if you have an auto loan will be for liability coverage, comprehensive coverage, and collision coverage.
State laws dictate the minimum amount of car insurance for liability that you must carry on your vehicle and the remaining insurance coverage that is available is usually optional. However, if you have an auto loan you are typically required to carry additional insurance by your creditor

Most often, the age and condition of your vehicle will dictate your decision.
That's right. Even after your auto insurance company figures out how much the car is worth and pays off the damage, you may still owe the carmaker some dough. And that's where gap insurance comes in.