In at least thirty states drivers with damaged credit can save hundreds of dollars every year on the full coverage insurance required for most auto loans
Borrowers that have experienced problem credit often have budgets and that are sensitive to the premium costs associated with auto insurance coverage required for car loans.
Here at Auto Credit Express we understand this issue because for more than twenty years we've been helping car buyers with poor credit that are looking for online car loans find those dealers that can offer them their best chances for car loan approvals.
In some cases we've found that buyers can't afford the monthly payment on the best vehicle they qualify for because their car insurance premium would be too high. In some states this is partially due to the fact insurance premiums can be partially based on the insured's FICO scores in addition to other factors
But even under these circumstances there is a form of full coverage auto insurance that could make the monthly premiums for some buyers with bad credit easier on the wallet.
Pay as you drive
It's called pay as you drive (PAYD) and, on top of the usual pricing factors, calculates a portion of the premium based on how far the vehicle is driven. In giving lower mileage drivers a discount the policy takes into account the reduced risks this poses for accident involvement.
How PAYD insurance works
PAYD insurance can be implemented in a number of ways and, along with other rating factors, can include specific mileage ranges, a per mile basis, or by the number of hours as well as the distance in miles a vehicle is driven.
Premiums for pay as you drive policies sometimes include options for shorter policy periods (a 1 month instead of a 6 or 12 month policy) as well as premiums based on mileage only (in which policyholders pay for 8,000 miles up front and when they reach that level they must renew the policy).
Monitoring these vehicles for the enforcement of time and mileage limits can be done in a number of different ways: with on-board systems (such as GM's OnStar), OBD-II diagnostic port systems (such as Progressive's "SnapShot" – a system that also monitors driving style), GPS meters or certified odometer readings.
The Bottom Line
PAYD insurance certainly has the potential to help low-mileage drivers – even those with deficient credit residing in states where auto insurance rates can be partially based on a driver's FICO scores.
This means that drivers that find themselves in this situation should make sure they check to see if their state allows some type of PAYD car insurance program. If it does, they should to check to see what those programs offer as well as what the savings might be.
One more thing borrowers with credit issues should check out is Auto Credit Express. That's because we specialize in helping consumers with car credit issues find the right dealers for their best chances at approved auto loans.
So if you're ready to reestablish your auto credit, you can begin now by filling out our online auto loan application.