Buying a car is never fun and the last thing you want to worry about is if that SR22 will stop you from getting that new car. Today more than ever banks are concerned with providing loans to consumers that cannot pay them back. Another concern lenders have is if the car is damaged or totaled will they get their money back from the accident. I will explain how an SR22 filing can impact buying a car and financing it.
Do banks accept SR22 insurance?
When you finance a vehicle with a bank or credit union they own the car until the loan is paid in full. This is also called a secured loan which means you are securing the loan with the value of the vehicle. The lender will want to make sure that you are financially fit to purchase the vehicle which is confirmed with your proof of income and credit score. They will also want to make sure the vehicle is protected against damage which could reduce the value of the vehicle they essentially own which is done with auto insurance.
If you want to finance or lease this new car the lender will want to be listed as first payee or lien holder on the auto insurance policy. They do not care if you have an SR22 insurance policy and they will not know the reason for the required filing. All the lender cares about is protecting their investment which is the car. So that means you just need to carry the proper amount of insurance to fulfill their requirements on the loan.
Full coverage is required
Auto finance companies like credit unions will require you have full coverage on your auto insurance. Full coverage is basically having the liability insurance in addition to comprehensive and collision coverage. Comp and collision is another term for full coverage which often have deductibles associated with them.
Most auto insurance consumers have $500 deductibles for both comprehensive and collision but there are many more options. In order to get financing on a vehicle you will need to meet the terms of the loan which will state a maximum deductible that you can have.
The reason an insurance company will have a maximum deductible requirement is to make sure you can afford to pay the out of pocket expense if the car is damaged. Most lenders will have a $1000 max deductible but check with your financial institution. There is no need to worry about having an SR22 when shopping for a new car but keep in mind your SR22 insurance will likely increase with a newer vehicle.