Can a credit union force car insurance on an car loan after financing has already been established?
Posted on Mar 11, 2008 under Insurance Information |They tacked on an additional @$2700 onto my loan and since that time my car payment went from $350 a month to $700 a month. Before this happened, my credit was good, and since after that time my credit changed drastically. I've been told that this may be illegal. If anyone has info, please let me know. Oh, and this is in CALIFORNIA.
March 11th, 2008 at 9:59 am
Yes, it's called "forced place" insurance and it is very expensive and it does not cover you, just the collateral.
Bad news, but not illegal
March 11th, 2008 at 9:59 am
I would think that getting your own full coverage insurance at a decent rate is all you had to do. They cannot force you to keep the insurance they put on your car. As long as you have proof of insurance that meets the loan requirements, as in full coverage to the limits they spec, they must drop that from the payment. Unless specifically worded in the original contract that lack of insurance will cause the loan to default to whatever the current rate for insurance is, and that once defaulted, shall remain for the duration of the loan, they can't charge you that. The other option is, to go to their competitor, and explain what happened, and refi the vehicle whith them. The original lien holder cannot charge the full amount of the insurance on a payoff, as it was calculated for the loan duration.
March 11th, 2008 at 9:59 am
Yes, its legal and almost ALWAYS happens
March 11th, 2008 at 9:59 am
if you have no insurance on the car then sure they want to insure the car loan is protected with insurance because if the car is wrecked and yo could walk away and not pay for the loan and they will be left holding the bag
March 11th, 2008 at 9:59 am
Not only is it legal for them to do this…the real rub is that if that car gets into a wreck, that insurance does not even cover YOU…that insurance only protects the sellers investment.
If you get your own insurance it should be way cheaper…if you do that the insurance that they tacked on will probably drop off.
How did this effect your credit?
I would think that putting some reference on your credit about not having insurance is illegal, pull your report to figure out how this has changed your ratings with the credit agencies
March 11th, 2008 at 9:59 am
Perfectly 110% legal. This insurance only covers the credit unions interest in the vehicle it does not cover you does not mean that if you cause an accident you can not be sued nor does it cover any state insurance requirements California might have. This is only so the bank isn't out money.
Would have been several thousand dollars cheaper for you to have gotten your own insurance. If you couldn't afford the insurance you should not have bought the car.
March 11th, 2008 at 9:59 am
If you let the full coverage insurance drop on your vehicle? They do have the right to do this it's called "Forced place insurance" the car loan companies have been doing this for years.
Also, a good site is…
http://www.surveyland.org/jump.php?link=auto
Take care.
March 11th, 2008 at 9:59 am
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