My bank is offering to take over my auto loan which sits at 10.5 % interest. for a rate of 8.45 % however they want to sell me life/disability insurance for 20$ a month on top of it over a 48 month term. the loan is only for 9,800$ this seems like a awfully high amount to pay monthly when I'm only 26 years old with good credit and in good health. Would I be better to try and get private insurance? my current auto loan does not have insurance on it.
1 Answer
$240/yr on an average balance of $4800 or so (with a very short term declining balance like this, a back of the envelope calculation is an average $4800 balance) This is a great deal. For the bank. Almost 5% more cost to you. You have two choices you can be polite and tell them “no thank you” or just tell them where to stick their loan offer. Your choice.
answered Mar 10, 2018 at 19:20
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So in other words i should shop around and see what an insurance broker might be able to offer? Commented Mar 10, 2018 at 19:25
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3You don’t need loan insurance. It’s only to protect the bank. Just pay the loan. Commented Mar 10, 2018 at 19:27
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@GeraldLeese If you are specifically interested in getting life and disability insurance, do some research (don't skip this part!) and then shop around for an individual policy. As JoeTaxpayer said, you don't need insurance on a loan. And you don't need a loan if you want to get your own life and disability insurance. Commented Mar 10, 2018 at 20:21