If you’re thinking about refinancing the loan on your vehicle and wondering whether it will affect your car insurance premiums or coverages, you’re in the right spot. There is a good chance that refinancing will alter your car insurance premiums. But exactly how much? It’s difficult to say until we know all the details.
We know that car insurance is complicated and car refinance should be easy.
What Matters To Auto Insurers When Creating A Car Insurance Quote?
The whole purpose of auto insurance is to cover your risks. Cars are expensive to buy, costly to repair, and quite dangerous! When getting a car insurance quote, you’ll be asked about:
- the make and model of your car
- the age and value of your car
- the mileage shown on your odometer
- the VIN and title status
- accident history of both the driver and the car
- garaging location
- the primary use of the vehicle (whether it’s for pleasure, commuting, or a work truck)
- average commuter miles, or average annual miles
- lienholder information (the bank, organization or person you make a car payment to)
- your personal information, like age, gender and marital status
- any other drivers in the home who might have access to the car
- your claims history
In most cases, you’ll only be able to refinance your auto loan if you have equity (meaning you owe less on the car than what it’s worth.)
Let’s imagine you’ve been driving your Mazda for three years, and you’ve put 40,000 miles on it. We’ll guess your car is worth $15,000, and you only owe $10,000 on it now.
The good news is that you no longer need GAP insurance! You’ll refinance your loan, and your auto loan payments are much smaller too. As long as you’ve been a safe driver, with no at-fault accidents, DUIs or speeding tickets, there’s a good chance your car insurance premiums will be cheaper.
But again, insurance topics are rarely simple, and there are always exceptions to the rules. If the model of your vehicle has been found to be dangerous (like SUVs that have a reputation for rolling over) or if you’ve had an accident or two, your insurer will consider these issues.
Ultimately, there’s a good chance your car insurance rates will decrease if you refinance. Know that every insurance customer has an ideal customer in mind, and ever car insurance policy is a unique contract. If you’d like to learn more about car insurance after a refinance, or if you’d like to get some car insurance quotes, let’s talk!