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What Happens if I Can’t Pay for the Full Coverage My Vehicle's Lender Requires?
Dec 22, 2020
The consequences of not carrying proper insurance can be severe
The lender’s remedies for not carrying proper insurance will be spelled out in the loan agreement signed when the vehicle was purchased.
Check your contract. You will find a clause that reads something like this:
Check your contract. You will find a clause that reads something like this:
The remedies for not carrying proper insurance coverage available to the bank include:
In the event the insurance is not paid, or the additional loan amount as a result of forced placed insurance is not satisfied, the next step would include:|
The details of this question describe the purchase of a motorcycle. If the amount borrowed is not too high, you may be able to offer some other form of collateral to secure the loan - or - depending on your credit history, negotiate a loan without collateral.
It is always in the auto loan consumer’s best interest to:
Letting the bank take action without attempting to work it out yourself will always lead to a less desirable result.
- Forced Placement: The Bank will obtain Comprehensive and Collision insurance…
- At Your Expense: The bank will pass the cost on to you. If you refuse to pay it will be…
- Added to Your Loan: With interest.
- At Higher Cost: At a cost that is likely much more expensive than coverage you could obtain yourself.
- Protects Only the Bank: You will not be a party to the coverage. The insurance will only protect the interest of the bank.
- No Liability or Medical Coverage: The bank is only concerned about securing their collateral. They are not a party to liability or medical loss. If they procure coverage, there will be no consideration for liability or medical losses.
In the event the insurance is not paid, or the additional loan amount as a result of forced placed insurance is not satisfied, the next step would include:|
- Repossession:
- Seizure of the Collateral: When you signed the loan agreement, you offered the car as collateral (say, guarantee for payment of the loan). Not adhering to the agreement (the contract) will result in the capture of the asset for which it is assigned as collateral.
The details of this question describe the purchase of a motorcycle. If the amount borrowed is not too high, you may be able to offer some other form of collateral to secure the loan - or - depending on your credit history, negotiate a loan without collateral.
It is always in the auto loan consumer’s best interest to:
- Procure their own insurance and keep it in force
- Proactively negotiate with the lender.
Letting the bank take action without attempting to work it out yourself will always lead to a less desirable result.
This article may have been originally published at Quora.com.
To see Jeff's Quora.com profile click here.
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