Valley auto Loans Is best known for helping people find good financing deals on auto loans when they have credit problems. But did you know we have a resource page that has many good car shopping tools and helpful “How-To” information on a variety of automotive subjects?
Things like, jumping a dead battery, plugging a tire, getting better gas mileage or even starting a simple budget that will help your car payments. So before you head out to buy that new car, check these and our other resources available.
A Look at Credit Disability Insurance
It is not uncommon for dealership finance managers to offer customers credit disability insurance when finalizing their car loan paperwork. Before making a final decision, consumers need to have an understanding of credit disability insurance and how it works.
Many consumers have heard about this type of insurance, but they do not know what it is or how it works. In most cases, a finance manager refers to this kind of insurance as credit disability.
To make it easy to understand, credit disability is a type of health insurance, and it can be attached to an auto loan. Consumers may have also heard of credit life insurance. Unfortunately, this form of insurance is only beneficial to the lender. A borrower should never confuse credit life with credit disability insurance.
Credit disability insurance can benefit both the buyer and the lender because it will make sure the bank gets paid if the borrower cannot make their payment. When a borrower becomes disabled or sick, the insurance policy is used to make certain the lender is paid the money they are owed.
The benefits for credit disability are activated when the borrower becomes very ill or injured. However, there is a waiting period for the benefits, so they do not start immediately. In most cases, it can take 14 up to 90 days from the date that the borrower suffered the disability.
The exact details depend on the policy fine print. After the waiting period has passed, the company that issued the credit disability policy will start sending the benefits.
Put simply; the insurance company will start paying the monthly loan payments for the disabled borrower. Normally, the borrower does not have to suffer a permanent disability for the benefits to be paid.
Credit disability insurance is a product added to your auto loan, and it is commonly sold by a finance manager at the dealership when you purchase a car. It is usually mentioned very briefly, so most people have no idea what the insurance does or why they might need it.
Consumers need to understand that there is a monthly fee for credit disability, and it’s determined by the initial balance of the loan. If a borrower decides that he or she would like credit disability insurance, the policy must be added before any of the loan documents are signed. The cost of the insurance coverage can be added to the total amount financed. The additional cost of the credit disability insurance will increase the monthly car payments, so consumers should be aware of this increase.
There might be several reasons why you should avoid purchasing this insurance. For starters, you might already have a life insurance policy, which will cover your car payments if you pass away.
When deciding if you want credit disability insurance, you need to consider how healthy, you are. You also need to take time and make sure to read all of the fine print and details. It is not uncommon for credit disability policies to be overpriced, so be careful you do not buy an overpriced plan.
Like most types of insurance, credit disability insurance also comes with some disadvantages. One of the downsides is the cost. The total cost of credit disability can be higher than a regular disability insurance policy, so consumers need to be aware of this fact and check all of their options. Since credit disability insurance is wrapped up with the car loan, the borrower is paying interest on the cost of the insurance. A separate disability insurance policy does not come with interest charges.