When you buy your car loan, think about unemployment insurance! Losing one’s job does not only happen to others. In a changing and contrasting economic context, this happens frequently, even to those who think they are safe. It is therefore safer to add job loss insurance, even if it is not mandatory.
The role of unemployment insurance in your auto loan
You may be wondering what are the advantages of taking out insurance as part of your loan to buy your new car? This is important because it replaces the borrower who once unemployed is in a difficult financial situation. Indeed, it covers all or part of the amount of the monthly payment that you must repay for a period that depends on the nature of the contract.
This insurance offers you a certain serenity even if you are fired while your loan is in progress. It works in the same way as compulsory insurance in the context of a mortgage.
It gives you the opportunity to better manage your daily budget and deal with the loss of income. Of course, it only works in certain cases, so it is necessary before making your choice to be well informed and read all the clauses of the contract.
Tip : You can buy unemployment insurance from the organization of your choice. Make comparisons by going in different insurance or online, to compare the different offers and choose the one that suits you best. If you have doubts about certain clauses, have a professional help you before you commit.
Look at the waiting period, during which the insurance does not intervene in the payment of monthly payments. Make sure everything is important and that it is best to take your time to find the one that offers the best value for money.
Clauses to carefully observe
We must be particularly vigilant on certain points, because if you ever need your insurance, it is better to know the exact terms of repayment. This is not compulsory insurance, but it is a great help if you lose your job. You have to carefully consider some criteria before choosing it so you do not make mistakes and get the best auto loan insurance.
As has already been mentioned, make particular mention of the duration of the waiting period. This is the period during which the insurance does not cover your monthly payments. That’s why it’s very important to consider it.
In general, the waiting period is between three and twelve months. We must be vigilant and predict this lack of care, perhaps simply by setting aside the equivalent of three or six monthly payments.
This period in the contract starts as soon as it is signed. During this period, if you are fired, you can not use the insurance cover.
Another important point is the deductible period, which differs from the waiting period, as it is generally shorter and starts only when you are actually unemployed. It is also included in the clauses of your contract where it is mentioned explicitly. It is three months, but some insurance companies put it at 4 or 6 months.
It is only at the end of this period that you can be supported. Since you no longer have to take out insurance with your bank since the Hamon law, you have plenty of time to find the best insurance.
Once the franchise period, the insurer repays the loan for you. It must be checked whether the latter takes care of all or only part of the monthly payments and for how long. These precautions prevent you from disappointments when you find yourself in this delicate situation.
The maximum amount of repayment varies with the number of months of unemployment and especially with the monthly payments to be paid each month. If you are unemployed for a year, for example, the reimbursement can range from 8 to 12 months depending on the insurance organizations.
Other criteria to examine
It must be assumed that the role of insurance is not there to finance your credit. The repayment is temporary for a fixed term during the period you are looking for work. In any case, you must pay attention to the conditions of repayment.
In summary : You will understand, the unemployment insurance under the auto loan is of real use for you because the risk of job loss is really existing.
Before taking out this insurance, we must check the various important criteria such as the waiting period and deductible, as well as all repayment conditions to reduce stress in this situation.