Yes, everyone who finances a vehicle must maintain full coverage auto insurance for the life of their loan. The lender still, technically, owns any vehicle that still has a balance left on the loan. Lenders require clients to maintain full coverage auto insurance to protect their investment.

Can you have only liability insurance on a financed car?

Typically, no. You don’t want liability only because the car will not be sufficiently protected. Financing companies require this because you owe money on the car and they need their loan covered, and if something happened and you only have liability, you would be responsible for the full loan and not have a car.

What kind of insurance do you need to finance a car?

So most reputable dealers will require, at minimum, collision and comprehensive insurance coverages for your car in order to protect their investment. Whether you finance your car or not, your state likely requires a minimum amount of bodily injury insurance. Let’s take a closer look at these coverages:

Do you need full coverage if you have a car loan?

Most people don’t buy a car outright – they take out a car loan to pay for it. That means the car is still owned by the lender until the loan is payed off. The lender will want you to have full coverage car insurance on the financed car to protect their investment.

How many types of insurance do I need for my car?

But a wide variety of options are available when it comes to insurance— there are actually seven different types of car insurance you can choose from —and it can be difficult to decide just what type of auto insurance is the best choice for you, your vehicle and your budget.

What should I know about car insurance before buying a car?

Always check with your insurance agent to get a quote on the insurance before making a car purchase. Insurance should be figured into your budget before buying a car. Example: John wants to buy a new car, and knows that he can afford to pay about $500 per month including car insurance.