Buying or Leasing a Car and How It Impacts Your Insurance

Deciding whether to buy or lease a new car involves considering various factors, including how each option affects your auto insurance. Your agent can help you understand the requirements associated with each and compare personalized quotes for vehicles as you choose between leasing and financing one.

Lienholders and Insurance Requirements

When you buy a car, you pay for it in full or finance it through a loan. Ownership gives you complete control, allowing you to modify, sell, or trade the vehicle as you wish. Once the loan is paid off, you own the car outright and are free from monthly payments.

Leasing a vehicle is akin to renting it for a fixed period, typically 24 to 36 months. Monthly lease payments are usually lower than loan payments, and you get to drive a new car every few years. However, leases often come with mileage limits, restrictions on modifications, and potential fees for wear and tear.

Whether buying or leasing, your car must be adequately insured. For leased or financed vehicles, the lienholder typically requires full coverage car insurance, including collision and comprehensive coverage. These policies may help repair or replace your car after a covered accident or incident, whether it was your fault or the events were outside your control.

You may also be required to carry guaranteed asset protection insurance, which can help pay off your vehicle if it is a total loss and your insurer’s settlement is insufficient.

How to Save on Full Coverage Auto Insurance

To help manage the higher insurance costs of maintaining full coverage on a leased or financed vehicle, consider combining auto insurance with home or renters’ insurance for potential discounts.

The Goal Auto Insurance Services Inc. agents in Modesto, CA, can help you compare quotes from multiple insurers to find favorable rates. Contact us today to review your lienholder’s requirements and get appropriate auto insurance for your financed or leased car.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.