Do Auto Loans Have Car Insurance Requirements?

Auto loans have different requirements depending on who the lender is, but the one trait most of auto loans tend to share is the requirement for auto insurance.

The amount of auto insurance and the type of auto insurance required on auto loans depends on what state you live in and what lender you deal with. Most lenders will require you to show proof of auto insurance in order for auto loans to be valid.

There are usually no minimum deductible requirements for collision, and comprehensive, including fire and theft. However, the maximum deductible is usually $1000 dollars. Who you buy your auto insurance from is up to you, and many lenders keep it very convenient by also offering auto insurance services as well as auto loans.

There are notations pertaining to interest charges that must be added to your auto insurance to cover the lender who is financing your automobile or leasing you an automobile. You are required to add the lender as an additional insured to protect the lender's interest in the car.

Requirements vary from one state to the other and one lender to another. It's important to check for local requirements.

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