Bad Credit Used Car Loans With Credit Life Insurance

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Bad Credit Used Car Loans with Credit Life Insurance Involving life insurance with a car financing deal is probably not something that you have heard of but in a lot of situations it is definitely an option that you will want to look into more. Finance managers at your local car dealership may offer this option to you and it may be described as you "protecting a loan" it is not always open to those taking out bad credit used car loans, but it is still something that should be understood in case it comes up.

Credit Life Insurance with Auto Loans

With all of that being said what exactly is credit life insurance going to be? Basically put it is going to be a decreasing term life insurance policy that will be added to a car finance contract. Now the term "decreasing" is going to mean that the payout amount is designed to cover the loan balance at any given point in the loan term. This means that as you pay off more of the loan the amount of coverage is going to decrease as well to match the owed balance. Usually your credit score will not matter as long as it is a new car purchase, but your age may make you not qualify for these loan situations. This has to be discussed and set up before you sign the loan terms though because it will need to be added into the contract terms.

Pros and Cons

It is important for you to weigh out the pros and the cons of taking out this time of insurance with your auto loan before you make any kind of decision on what to do:


  1. Peace of mind - Knowing that in case of the worst that the vehicle is going to be paid off by the insurance company and not added to someone's debt is a great comfort.
  2. Convenience - It is added into your current monthly financing bill so you do not have to worry about making an extra payment to someone entirely different.


  1. Cost - This can make things more expensive for you and it may not be an extra fee that you can afford or is just unnecessary for your budget.
  2. Interest expense - Because it is being added to the loan it is going to make the overall interest go up because the overall monthly payments are going up.
  3. Single borrowing - If you are single and there is no co-signer you should not worry about this because it is not going to become anybody's responsibility.

When all is said and done though if you have someone that would inherit this debt if you were to pass it is an option to consider. Know what you need and what is best for your situation and most of all make sure that you are well educated on every term of your auto loan before you sign anything.

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Do you meet the basic qualifications?

  • At least 1 year with current employer
  • A minimum income of $1,500 per month
  • No repossesions within the last year
  • Any bankruptcies must be discharged
  • Money down may be required, but not in all cases
  • Must be a current resident of the U.S. or Canada