Can a lender take the car back if you have no insurance?
Answer:
Yes they can. At this point in time the lender has a lein on the title until the car is paid for. In the sales/loan agreement the purchaser certifies that they will insure the vehicle. The reason is that if you need a car loan you probably can't pay for the car outright. If the car is totaled the insurance pays the lender first thereby covering the lenders losses. If the insured value is less than the ammount owed the purchaser is still on the hook for the difference.
Tell your friend to go get insurance before the lender comes and takes their car back. Because if this happens look out credit rating they will have nothing but problems ever financing another car.
I would think so. Another thing they can do is put single interest insurance on the car and add it to your car note. It covers what you owe to the bank only. No liability. If they put this ins on your car and the car is totalled it pays only what you owe the bank. If your car is worth more than what you owe - it pays you nothing.
Yes, and for good reason..the value of the car is the lender's problem! If your friend totals it, how does the bank get repaid?
She needs to go get insurance, yesterday!
Sort of. What they do is put "forced placement" coverage on the car - ie, if your friend doesn't insure it, they do - and add the insurance payment to the monthly payment. THEIR insurance usually runs $800 - $900 A MONTH. So if your friend doesn't pay the extra $800 a month, THEN they reposess it. The FIRST money they receive goes to the insurance, so effectively, your friend isn't making the monthly payments on the loan (because it goes to the insurance first). It gets repo'd for non-payment of the loan.
the short answer. Yes.
In her contract she probably agreed to that term.
Most people do.
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