My dealer offered me credit insurance. What is it? - Credit Loan Insurance

Credit insurance makes your car loan payments if you cannot for certain reasons. When you are applying for your auto loan, you may Credit Loan Insurance be asked if you want to buy credit insurance – or it might already be included in your loan offer.

If you are considering credit insurance, make sure you understand the terms of the policy being offered. There are four main types of credit insurance:

• Credit life insurance, which pays off all or some of your loan if you die
• Credit disability insurance, also known as accident and health insurance, which makes payments on the loan if you become ill or injured and can't work
• Involuntary unemployment insurance, also known as involuntary loss of income insurance, which makes your loan payments if you lose your job due to no fault of your own, such as a layoff
• Credit property insurance, which protects personal property used to secure the loan – in the case of an auto loan this would be your car – if it is destroyed by events like theft, accident, or natural disasters

Before deciding to buy credit insurance from a lender, think about your needs, your options, and the cost of insurance. Credit insurance can Credit Loan Insurance be expensive and, if financed as part of your loan, it will increase your loan amount and you will pay additional interest. Consider whether another type of coverage with a monthly payment makes more sense for you than financing the entire premium as part of you loan.

Tip: If you decide you need insurance, there may be cheaper ways for you to obtain coverage.  For example, life Credit Loan Insurance may be less expensive and allow you to pay off more than just the amount of your car loan.