Credit life insurance is a personal choice when financing a vehicle with a bad credit auto loan

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If you have poor credit and you're thinking of applying for a bad credit car loan, you also may be wondering if it makes sense to buy credit life insurance. We know, because 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 retail buyers secure 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 car 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 can even end up in repossession).

But once approved, there are often other choices that have to be made, one of which is whether or not to sign up for credit life insurance.

Credit life insurance

Credit life insurance is a type of decreasing term life insurance. Term insurance is an insurance policy that is in force for a fixed period of time and cannot be renewed. Unlike a whole life policy, it builds no cash value.

Decreasing term means that the policy is designed to match whatever the loan balance is at any point during the loan term. As the loan is paid off, the loan balance decreases and the amount of insurance covering the loan balance decreases to match the amount owed.

How to buy

If you want credit life insurance as part of your bad credit auto loan, you have to buy it at the time you sign the loan documents. The monthly premium is based on the original loan balance and the cost is added to the finance contract and included in the monthly car payment.

Is credit life worth the cost?

Like disability insurance, you'll have to decide if credit life insurance is worth the cost. Here are some facts:


1.    Peace of mind – credit life insurance will pay off your car and your estate won't be responsible for the loan balance or loan payments if you should die before the loan contract is paid off
2.    One payment – the life insurance payment is part of your car payment, so there is no separate premium you'll need to pay.


1.    Cost – as a rule, credit life insurance is usually more expensive than if you were to take out an individual term life insurance policy for the loan amount.
2.    Interest payments – because it's part of a loan, you're paying interest on the cost of the policy every month.
3.    If you're single - if there is no co-signer on the loan and you're single, even if you were to die your family is not legally responsible for the loan balance.

The Bottom Line

The decision to carry credit life insurance on a bad credit auto loan is one that you will have to make. If you have a family or a co-signer and you're worried that they might not be able to make payments, you might want to first look at the costs of an individual term life insurance policy before you sign on the dotted line.

Auto Credit Express has helped thousands of people with bad credit buy cars and reestablish their car credit at the same time. Our nationwide network of affiliate dealers specializes in second chance auto loans.

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 auto loan application.