Do Dealerships Have a Say in the Car Insurance You Choose to Buy?

Your car, your choice, right? How can the dealership tell you what type of insurance you should buy before the auto financing can go through? Most used car dealerships in Spartanburg, SC do ask you to buy a specific type of insurance, especially if you are financing the vehicle with them. And the more amount you take as an auto loan, the better coverage the dealerships expect. It may seem highly unfair to you because of the associated insurance costs but the dealerships have a reason as well. Factoring in the insurance cost in your overall car’s budget might just be your best bet.

Why dealerships request a specific type of insurance?

When you buy used cars in Spartanburg, SC, and finance them with buy here pay here dealers, you naturally do not pay the full amount upfront. Even when the title has changed hands and legally the car is yours, the dealership continues to have a vested interest in the vehicle as you still owe a part of the vehicle’s price.

Say, the used car is totaled tomorrow and you only have basic coverage. The insurance company will pay only for third-party damages. You will have to fix the car from your own pocket. If you cannot bear that financial burden and then cannot satisfy the vehicle’s loans, the dealership will lose its money and the vehicle. Now, a legal battle can be fought and the dealership may compel you to sell another asset and meet its loan requirements but no one really wants to take that path. Hence, almost all used car dealerships in Spartanburg, SC ask their customers to buy specific plans if they are choosing the finance with the dealers.

But not always do dealerships have a say

Say you are buying a used vehicle from car lots with no money down. Naturally, you owe a chunk of the car’s price as a loan. In such a scenario, the dealership may ask you to get comprehensive or collision coverage to protect their interests so that the insurance company can at least pay back their loan. But if you pay a high down payment while buying a used car, the dealership’s vested interest in the vehicle reduces. Then, the dealer might not ask you to get a comprehensive plan and a basic one should do. It all ultimately comes down to the loan amount that you take while financing.

Budget to include insurance costs