The banks want to protect themselves against credit defaults with residual debt insurance. It is often the case that a loan agreement is only concluded if the borrower takes out such insurance. Depending on the type of contract, a residual debt insurance covers the installments for the loan in the event of death, illness or unemployment. Thus both parts are secured. But graduation is not always worthwhile. Ultimately, it depends on the loan amount whether such insurance is chosen. Read more at omalley-car-rentals-ireland.com
Interesting facts about residual debt insurance
Whether a car loan with residual debt insurance is worthwhile depends on the purchase price of the vehicle. If the car costs a five-digit amount, then the conclusion actually makes sense. If the bank does not offer such insurance, the borrower can also take out insurance with an independent insurance company.
The advantage of residual debt insurance is that, in an emergency, it intervenes faster with payments than life insurance. It often takes months before these are paid out, but the rates for buying a car still go on. Everyone knows that paying income in installments due to unpredictable events can be difficult.
A car loan with residual debt insurance is more expensive than a normal installment loan
A car loan becomes more expensive with a residual debt insurance, because this is not included in the annual percentage rate. Nevertheless, one should be closed under certain conditions, because a financial bottleneck can quickly lead to payment difficulties. Even if this happened through no fault of your own, enforcement measures still threaten. This can be avoided with residual debt insurance.
When the conclusion makes sense
It is not only useful to take out insurance when buying a car. This is inevitable when buying property, because this involves significantly higher amounts of money and these should already be secured. With a car loan only the car is at stake, with real estate the whole home. A car loan with residual debt insurance is in no way worthwhile when buying a used car that is not even that expensive. Car buyers should be careful not to get them blown up.