What Happens If You Crash a Financed Car Without Insurance
Nowadays, the ratio of road accidents is almost double that of a few years ago. Thus, most states announced insurance as mandatory for every car driver. In fact, as per the new rules, you can also buy an insurance policy, even before purchasing a car. Still, many people need to pay more attention to insurance for its high rates or other reasons.
But have you ever heard of a situation in which your financed car met with a hazardous car crash accident, even before paying the entire bank loan? In addition to that, you can’t even get an insurance policy; how will you manage this situation?
So, here in this article, we will mainly talk about a situation, “What Happens If You Crash a Financed Car Without Insurance,” what to do, and more. Thus, stay in touch with us and read the entire article carefully.
What is a Financed Car?
Financing a car simply means buying a car by taking a loan from any car lender or any financial institution, such as a bank. Here, you have two options: finance the total cost of a vehicle or pay the loan amount on a monthly installment basis by adding some interest to it.
Most car loans are secured, which means that your car is used as collateral for any of the reasons; if you stop paying the car loan, then here, the lenders have a legal right to take the car possession from you and sell it to any other person, and get their money back.
On the other hand, if you technically own a financed car, the lender has a right to take the vehicle back if you break the loan agreement or do not pay the amount on time.
Documents Needed While Financed Car:
If you are going to take a financed car, then here are some of the legal documents you need to submit first as proof such as;
- You need to submit your driver’s license
- You can also submit the income return statement
- Credit and banking history is an essential document you must submit.
- Confirm residence address
- Vehicle-related information, such as model, year, make, etc.
- Copy of your insurance policy
- The method you will use to finance a car is via cash, credit, or cheque.
Advantages and Disadvantages of Financed Car:
We all know very well that everything has two sides: one is positive, and the other one is negative. So, let’s see some of the merits as well as demerits of financed cars, such as;
Advantages of Financed Car:
- The most significant benefit of financing a car is getting the money instantly.
- You become the eventual owner of the vehicle, and later, you can choose to keep the car for years or sell it the car and use that money to buy the following vehicle.
- Another benefit you receive while financing a car is that you can quickly improve your credit score.
Disadvantages of Financed Car:
- One of the most significant drawbacks of financing a car is its high-interest costs.
- Also, you can only finance a few particular types of vehicles; for instance, if you want a loan for your 10-year-old car, the bank will not provide you a loan for your old car.
- While financing a car, one must include full coverage insurance as it includes both a collision and comprehensive coverage, which is generally more expensive than the other coverages.
Types of Insurance Coverages Financed Car Includes:
We all know a few basic types of coverage that accompany the insurance policy. So, those three are generally a common type of coverages, including;
- Liability Coverage:
As we already know, the Liability Coverage covers all the damages and personal injuries you caused to other people or property.
- Comprehensive Coverage:
This coverage mainly protects you against the damages caused by theft, fire, vandalism, or due to natural disasters.
- Personal Injury Protection:
This coverage’s primary purpose is to pay for the medical expenses and lost wages you and your passengers suffered due to the accident incident.
Here, the best option to ensure your financed car is to go for comprehensive coverage or a full coverage option, as it includes both collisions and comprehensive coverage in one.
What Happens If You Wreck a Financed Car Without Insurance?
Now, imagine a situation in which you meet with a car crash accident, and you have insurance coverage that provides you with financial support. Conversely, what happens if you wreck a financed car and don’t even buy an insurance policy? How troublesome a situation is this, isn’t it, guys?
In addition, here we highlight some crucial aspects you may face, some legal consequences of driving a financed car without insurance, and more. So read this section carefully to know what issues you might have to suffer if you drive a financed car without insurance.
Legal Consequences of Driving a Financed Car Without Insurance:
We all know the importance of having an insurance policy, right? Specifically, when you have taken a financed car, the lender must demand full coverage from you while investing the money, as it protects them in case of car crashes, accidents, or any other damages.
But, if you are caught driving a financed car without insurance, then it will be considered an illegal vehicle, and you may face some legal consequences, too, such as;
- As per legal laws, you must pay high penalties, which may burden you financially.
- If you have broken the legal rule here, your driving licence may suspended.
- While dealing with any accident, if anyone is injured or their property is damaged because of your fault, you must also pay for their losses.
- Also, you are responsible for paying for the repair or damages caused to another’s vehicle because of your fault.
- Keep yourself ready for the lawsuits the other vehicle driver filed against you for the damages that were caused to your vehicle.
So, these are a few legal consequences you must face if you are driving a car without insurance.
Negative Impacts On Credit Score:
Driving a car without insurance can have a terrible impact on your credit score because, in that situation, you need to pay the entire cost of damages from your pocket.
Not only that, but the following are a few reasons that you need to face because of a bad credit score such as;
- You must pay the damage cost out of your pocket to make a better impression on your credit score.
- You will not be able to get a loan quickly in the future because of your bad credit score.
- Now, if your insurance coverage lapses and you have an insurance gap on record, that is also detrimental to your credit ratings.
Final Words:
Driving a Car without insurance is one of the biggest mistakes the driver makes; here, by doing this, they risk their and others’ lives. Specifically, if you drive and crash any financed car without insurance, you must face the above-given legal consequences, which will severely impact your driving and credit score history.
So, please, if you have yet to buy an insurance policy, then go and connect with your nearby insurance provider and buy the policy immediately; yes, do not forget to add the full coverage option to your policy, as it will save you from any car crash incidents, as well as from stolen, fire, and more.