Understanding Credit Disability and Bad Credit Auto Loansby Steve Cypher on Monday, April 4th, 2011
Know what credit disability insurance is when taking out a bad credit car loan
For over two decades Auto Credit Express has helped credit-challenged car buyers establish their car credit. During that time, we’ve personally helped hundreds of buyers at the retail level obtain a bad credit auto loan while helping them avoid a tote the note dealer (buyers outside our area can now fill out a bad credit auto loan application on our web site) as well as counseling them on the best way to use a bad credit auto loan (buyers who don’t sometimes even end up in repossession).
But once approved, there are often other choices that have to be made, not the least of which is deciding whether or not to sign up for credit disability insurance as part of a bad credit car loan.
About credit disability insurance
Also called accident and health insurance, credit disability insurance is set up to provide funds for your car payments if you should become sick or injured and unable to work.
Depending on the type of policy, the waiting period for benefits begins anywhere from 14 to 90 days from the date your disability begins. Once this time has passed, the policy begins making your car payments. In most cases, but not always, the benefit is retroactive to the first day of disability. In addition, you do not need to be permanently disabled in order to receive benefits.
If you decide to buy credit disability insurance, you usually have to do it at the time you sign up for your car loan. The monthly premiums are based on the amount financed and the type of coverage you choose and the cost is added to the loan and included in your monthly payment.
Does it make sense?
You really have to decide if it’s worth the cost. Here are some advantages and disadvantages:
1. Peace of mind – it will make your car payments for you if you become either temporarily or permanently disabled
2. Easy pay – the insurance payment becomes part of your monthly car payment, so there is no separate insurance premium to pay.
1. Cost – in most cases, these policies are more expensive than if you were to take out a separate disability insurance policy for the loan amount.
2. Interest costs – you are paying interest on the insurance premium every month – something you wouldn’t have to do if you had a separate disability policy.
The Bottom Line
The decision to carry credit disability insurance on your loan contract is one that you’ll have to make. But consider this: if a disability would seriously affect your ability to keep your car, you might want to weigh the cost versus benefit of a disability policy included with your car loan.
Auto Credit Express has helped thousands of people with bad credit buy cars and reestablish their car credit through a nationwide network of affiliate dealers that specialize in bad auto credit.
So if you are serious about getting your credit back on track, you can begin the process right now by filling out our secure online bad credit car loan application.