Paying off a car loan is a major feat, and there are some serious benefits that come from finally sending off that final payment. The type of auto insurance coverage you have is influenced by whether or not you have an open loan, and you might be wondering what happens now that you’re finally the true owner of your vehicle. Now that you hold the title, you’ll want to think about these changes that might occur with your policy.
Inform Your Insurance Carrier to Remove the Lienholder
Up until this point, your lender has likely been listed on the policy as an interested party. This is usually a requirement for loan approvals, but it might’ve been a few years since you set the policy up. Since the lender no longer has a stake in your car, you can take them off so they don’t receive a payout if you have to file an accident claim. Typically, you’ll receive the full funds as long as you’re the only person on the title. However, making sure the lienholder isn’t listed on the policy saves you from potential holdups during the claims process.
Expect the Rates to Stay within the Same Range
You might be hoping your car insurance San Diego rates will suddenly drop significantly. However, they’re influenced by more than whether or not you’re paying on a loan. Making sure you have a good driving record is one of the best ways to maintain low rates. The good news is that paying off your loan might have a positive impact on your credit score, and this might lower your insurance rates in the future.
Get the Opportunity to Choose the Level of Coverage
Your average rates might not drop, but you do have ways to save money. Most auto loan lenders require you to purchase comprehensive coverage that provides financial security in the event of any type of accident. Your lender may require you to have coverage that protects against one-party accidents along with natural disasters that could damage your car.
After you’ve paid off your loan, you have more freedom regarding the level of coverage you choose to purchase. Keep in mind you might still want to keep comprehensive coverage if your car is still relatively new and has retained its value. Switching to liability only is also an option if you aren’t as concerned about repairing damage after a self-caused accident.
Decide if You Prefer to Adjust the Deductible
In addition to changing the level of coverage, you might also be able to alter how much you’ll need to pay for a deductible before the insurance kicks in. Many lenders require you to maintain a low deductible so they can be certain you’ll pay to get the car repaired. Increasing the deductible is another way to save money on your monthly insurance payments, but you’ll want to weigh this benefit against the value of being able to pay less after an accident.
When they need affordable, reliable car insurance, San Diego drivers turn to Altra Insurance Services. For high-quality coverage and outstanding service, reach out to one of our friendly representatives today at (800) 719-9972 to learn how you can save money on your car insurance.