Owning a car today seems to have become a major need to be fulfilled. Without a car, it is as if various activities are quite difficult and do not run optimally.
Well, the problem is what if the available funds are very limited to buy this four-wheeled vehicle. Thus, it is not uncommon for people to choose to buy a car on credit.
Another reason why people choose to buy used cars on credit is that the value of this one item continues to decline over time. Even so, it is not uncommon for people to choose to buy a new car instead of a used car for various reasons.
Used Car Loan Plus Insurance
The leasing company or lending bank usually determines that the car being credited is accompanied by insurance. The goal is to protect cars that during the credit period belong to the lease or the credit buyer bank.
This means that car loans and insurance are already in one package offered. So that this car insurance is included in the car loan package. So this insurance is mandatory, for those of you who decide to buy a car on credit at the leasing company or credit provider bank.
For example, a used car loan package plus insurance offered by leasing companies. So, prospective creditors usually only need to pay a down payment and installments for a few years without choosing insurance, because it is included in the package. The weakness of this method, usually the price is more expensive than we think.
For example, John Doe buys an “H” brand car for $500,000, with a down payment of $100,000 and monthly installments of $10,000 for 40 months. Then the money along with the monthly installments paid by John Doe includes vehicle insurance facilities. Well, here John Doe doesn’t choose what type of insurance is on his credit car.
Make Sure Credit Car Insurance is All Risk
Leasing companies usually have car insurance included in the credit car package. So, you just have to pay the down payment and installments for several years without the headache of choosing insurance.
The weakness of this method, of course, the price can also be much more expensive than we think. So, how? Of course, we want to be more economical, right? If there is a cheaper offer, surely we will think again to choose which one is most suitable for our financial circumstances.
Before choosing, you should understand well before deciding to take one of the cars that will be purchased on credit, starting from the price, the condition of the car, including its performance, don’t let the car body look smooth and good, but it turns out that the engine has a problem not long after being purchased.
This also determines the importance of car insurance in the installation package. So, make sure that the used car you buy on credit clearly covers all risks or is all risk. If not, then in the middle of the road you could end up spending a lot of cars maintenance costs.
For that, what needs to be observed and criticized is the offer of car loans. Does the car insurance protect or protect as a whole? Don’t let it turn out that the insurance on the car you bought on credit doesn’t cover everything.
Beware of the ‘Trap’
Often the offer of used car loans on the market is quite tempting and attracts interest to own it. Therefore, it is necessary to be careful and careful in choosing the car to be purchased on credit. At the very least, don’t get caught up in the marketing game.
At least there are several offers that are tantalizing used car loans, but they are actually just trapping. What are they?
Anyone seems to agree that non-percent interest looks profitable. Remember, that it could be just a marketing strategy. Because it is not impossible if the cut costs are not borne by other costs.
It could be that these costs have actually been included in other components. This means that you don’t actually get zero percent interest, but you may pay other fees that actually swell without realizing it or knowing it.
Free all risk insurance in the second year
A car loan offers that can be tricky are free insurance offers that cover the whole up to the second year or any year. If you are offered free all-risk insurance in the second year of the used car that you bought on credit, then you need to be aware of it.
Thus, the meaning is actually not cheap. Because in the second year of the installment, you are required to pay a higher insurance fee than you should. Not profit, but actually lose more costs that will be incurred.
Carefully choose the type of car insurance
With the above possibilities, you should carefully choose the vehicle insurance to be purchased. As a consideration, you can also choose TLO (Total Loss Only) insurance as an option at a cheaper price than all-risk insurance.
The difference between the two insurances is twofold, where the possibility of the occurrence of an all-risk car insurance claim is greater than that of TLO insurance. Therefore, the insurance company has also calculated the probability of a claim being submitted.
Please note, this TLO type car insurance only compensates for losses of more than 75%, if the car is badly damaged or stolen. If it is only grazed, dented, and others, you will not get compensation. While all risk car insurance will be guaranteed or protected in whole or in all.
TLO Insurance Is More Profitable When Buying a Used Car?
If you decide to buy a used car, there’s nothing wrong with choosing TLO insurance. This is actually more rational considering that you buy a used car, right? So that the financial losses suffered when something happens to the used car, will be less than the cost of owning a new car.
Try applying for the type of car loan that we want ourselves. But that means we have to know exactly about existing car insurances, including the advantages and disadvantages. Usually, the leasing party will not easily agree to your offer if it turns out that the benefits of insurance are more minimal.
Therefore, look for insurance whose value is not too expensive but brings benefits according to the leasing needs. Of course, it’s not easy, but it can be tried. If successful, of course, the amount of insurance premium that you will bear will not be too large.
Remember, whether there are claims or not, the insurance premium must still be paid. If there is a claim, it may be that the costs paid are not as big as expected. However, there is still no harm in taking car insurance.
If calculated, it could be without insurance, the damage that must be borne is fantastic. Especially if you buy a particular brand of car with large spare parts or maintenance costs. Car insurance is enough to help reduce the cost of caring for your car later.
Consider The Insurance and Choose Your Car Loan
If you want to buy a car on credit, make sure you understand well so you can choose the insurance needed. Maybe this looks trivial, but actually has a better impact or benefit for your favorite car later and your finances. Or, do not let the selected insurance costs too expensive or out of the ordinary. Choose the right lease that can accommodate your wishes.