Car loans and comprehensive insurance go hand-in-hand. In Rio Rancho, NM most financing agreements require full auto insurance coverage. It is important to know about getting auto insurance when you have a car loan in Rio Rancho.
Why Do Vehicle Loans Require More Coverage?
The lender wants to ensure they protect their investment in an accident, theft, or natural disaster. So, they may require you to purchase comprehensive and collision coverage when you finance a vehicle.
How Much Auto Insurance Coverage Do I Need?
The auto insurance coverage you’ll need depends on several factors, including the value of your car, your personal assets, and your state’s minimum insurance requirements. The financing company may also have minimum insurance requirements.
Your Franklin Insurance Agency can help you determine the right coverage for your needs and budget.
Gap Insurance for Auto Loans
If you have a loan on your vehicle, you may purchase gap insurance. This type of policy covers the difference between what you owe on your car and the actual cash value of your vehicle if it’s totaled or stolen.
For example, you owe $20,000 on your car loan, but your vehicle is only worth $15,000. If your car is totaled in an accident, you would still owe the $20,000 to the lender. But with gap insurance, your insurer would pay the $5,000 difference.
Gap coverage is separate from comprehensive and collision insurance, so you’ll need to purchase it as an add-on to your auto insurance policy.
For more about car insurance in Rio Rancho, NM, contact your local Franklin Insurance Agency. We’re here to help you find the right coverage at the best price.