Buy-here-pay-here dealerships like SmartRide are different from traditional dealerships because they usually finance the cars they sell themselves. This means they don’t work with banks or other lenders to give you a loan. Instead, you make payments directly to the dealership.
Because buy-here-pay-here dealerships take on more risk by financing cars for people who might not have great credit or a big down payment, they often require you to have certain kinds of insurance.
That’s why we’ve put together this guide on insuring a buy-here-pay-here car. Read on to learn everything you need to know about buy here pay here car insurance.
What You Need to Know About Buy Here Pay Here Car Insurance
Car insurance is super important when you own a car, no matter where you got it. Knowing some basics can help you make smart decisions about what coverage you need and how much it will cost.
Different Types of Car Insurance Coverages
There are a bunch of different types of car insurance out there. Some of the main ones include:
- Liability insurance: This covers damage and injuries to other people if you cause an accident. Most states make you have at least some of this kind of insurance.
- Collision insurance: This covers the cost of fixing your car if you get into an accident, no matter whose fault it is.
- Comprehensive insurance: This covers damage to your car from things like theft, weather, or animal damage.
- Personal injury protection (PIP): This helps cover your medical bills if you or your passengers get hurt in an accident.
- Uninsured/underinsured motorist coverage: This covers you if you get into an accident with someone who doesn’t have enough (or any) insurance.
Know The Lingo
When you get car insurance, you’ll have to pay a deductible and a premium. Here’s what that means:
- Deductible: This is the amount you have to pay out of your own pocket before your insurance kicks in. A higher deductible usually means lower monthly payments, but you’ll have to pay more if you get into an accident.
- Premium: This is the amount you pay each month for your insurance. It can be higher or lower depending on stuff like your age, your driving record, the kind of car you have, and where you live.
Insurance Requirements for Buy-Here-Pay-Here Cars
At most buy-here-pay-here dealerships, you’ll need to have full-coverage insurance. This means that you will need the normal “liability” coverage that your state requires PLUS you will need Collision and Comprehensive coverage.
The reason for this is pretty simple: the dealership wants to make sure the car is covered in case something happens to it. If you get into an accident, collision insurance will cover the cost of repairs to your car. Liability insurance will cover the other person’s car and any medical bills they have if you’re at fault.
Comprehensive insurance covers other kinds of damage to your car, like theft or weather damage. Some buy-here-pay-here dealerships require this kind of insurance because they want to protect the car from anything that might happen to it, even if it’s not your fault.
How to Get Car Insurance for Your Buy-Here-Pay-Here Car
Getting car insurance for your buy-here-pay-here car is usually pretty simple. You can start by asking the dealership if they have any preferred insurance providers. They will surely require you to provide proof of insurance before you can drive the car off the lot.
If you already have car insurance, you can usually just call your insurance company and add the new car to your policy. They’ll ask for some basic information about the car, like the make and model, and then give you a quote for how much it will cost to add the car to your policy.
Things That Affect How Much You Pay for Buy-Here-Pay-Here Car Insurance
There are many things that can affect how much you pay for car insurance when you have a buy-here-pay-here car. Here are some of the main things that insurance companies look at:
Your Driving Record
Your driving record is one of the most important things that insurance companies look at. If you’ve had a lot of accidents or gotten a lot of tickets, they’ll probably charge you more for insurance because they think you might have more accidents in the future.
Your Age, Gender, and Credit Score
Insurance companies also look at things like your age, gender, and credit score. Younger people and men tend to pay more for insurance because they tend to get in more accidents. If your credit score is low, they might also charge you more because they think you might not be as responsible with your car.
Where You Live
Where you live can also affect how much you pay for insurance. If you live in a city with a lot of car theft or accidents, you might have to pay more for insurance.
Your Car Make & Model
The type of car you have can also affect how much you pay for insurance. If your car is expensive to fix or has a high risk of getting stolen, insurance companies will charge you more for coverage.
Your Coverage Amounts
Finally, how much coverage you want can also affect how much you pay for insurance. If you want more coverage, you’ll usually have to pay more.
Frequently Asked Questions
Q: Do I need insurance if I buy a car from a buy-here-pay-here dealership?
A: Yes, you’ll need to have insurance on your car to legally drive it. Most buy-here-pay-here dealerships will require you to have insurance before you can drive the car off the lot.
Q: Can I get insurance if I have bad credit or a low income?
A: Yes, there are insurance companies that specialize in serving people with bad credit or low incomes. You may need to pay more for coverage, but there are options available to you.
Q: What kind of insurance do I need for a buy-here-pay-here car?
A: You’ll definitely need to have liability insurance which your state requires, which covers damages you cause to other people or their property. You will also most likely need to add collision and comprehensive coverage which is sometimes called “Full-Coverage”.
Q: Can I change my insurance policy if I find a better deal?
A: Yes, you can switch insurance companies or change your coverage levels at any time. Just be sure to cancel your old policy before starting a new one to avoid any lapses in coverage. You will also likely need to notify your huy-here-pay-here dealership of the new insurance.
Q: What happens if I can’t make my insurance payments?
A: If you don’t make your insurance payments, your policy will likely be canceled and you won’t have insurance coverage. This can put you at risk if you get in an accident or if something happens to your car. This would also likely put you in breach of your buy-here-pay-here contract and put you at risk of repossession.
Q: Do I have to get insurance through the dealership?
A: No, you don’t have to get insurance through the dealership. You can choose any insurance company that offers coverage in your area. However, some dealerships may offer insurance options as part of their financing package, so it’s worth considering their offers as well.