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?

Answer
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.
Eric Schad
Answered on Nov 08, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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