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What is credit insurance on a car loan?
I want to get a car loan, and the lender told me to consider credit insurance. What does this mean?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Very simply, credit insurance on a
car loan
is a product that makes your car loan payments if you can’t. Most credit insurance policies will continue payments in the event of your:- Death (pays the balance of the loan)
- Disability
- Involuntary unemployment
On average, credit insurance costs approximately 2% to 4% of the amount borrowed. If you’re employed in a line of work that has job volatility or is deemed dangerous, the price might be worth the investment.
When you get a car loan, you should also consider other products that protect you from financial distress.
Collision coverage
and comprehensive coverage
are required by your lender. But you may also want to add gap insurance
, which pays the difference between your loan balance and the value of the car if it’s totaled in an accident.Whatever insurance products you decide to buy, shop around with
Jerry
. Sign up in less than a minute to compare quotes from dozens of top-notch, reputable car insurers.View full answer
- Gregory R.
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