Will a repossession affect auto insurance rates?

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Things to Remember...
  • It’s possible to obtain auto insurance after a car repossession, though it’s likely you’ll pay higher auto insurance rates
  • A credit file that shows you’re late paying bills and financial obligations are likely to cause the company to approach your application with more caution than someone with a higher credit score
  • It’s a good idea to review your credit report prior to purchasing a new or used auto, or prior to applying for auto insurance

Many people ask “Will a repossession affect my auto insurance rates?” The short answer to this question is yes.

Auto insurance underwriters use an insured’s credit score in part to determine financial responsibility. Managing a personal credit file is a necessity for every adult in the United States.

Most bills and outstanding revolving loans that you pay each month report to the three major credit bureaus: Experian, TransUnion, and Equifax. Public information about each person’s financial history is also accessed by the three credit reporting organizations.

Use our fast, free comparison tool to obtain competitive auto insurance quotes from other insurance companies. Don’t give up! And don’t pay more than you must for auto insurance rates.

If you’ve suffered an auto repossession, you know it’s devastating personally and financially. Some auto insurance companies won’t even offer an auto insurance quote if you’ve lost a vehicle through repossession.

That’s why it’s important to compare your existing auto insurance quotes with those of other competitive insurance companies. It’s possible to obtain auto insurance after a car repossession, though it’s likely you’ll pay higher auto insurance rates.

How does my FICO score impact my auto insurance rates?

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Insurance companies use your FICO credit score to help determine financial responsibility. A credit file that shows you’re late paying bills and financial obligations are likely to cause the company to approach your application with more caution than someone with a higher credit score.

Understanding why a repossession affects auto insurance rates involves studies conducted by insurance companies about consumer financial behavior.

People with a responsible attitude towards financial obligations tend to demonstrate responsibility and care for other parts of life, too. Financial responsibility can reflect responsible home ownership, auto care, and driving.

Insurance companies conclude that a financially responsible person is less likely to be at fault in a car accident.

That’s why insurance companies conclude that a person’s credit history can help to predict his driving record. Drivers with good credit are statistically better risks for the insurance company’s underwriters.

So how will the repossession impact my current premium?

Your premium will increase. Not everyone with a low credit score is inherently irresponsible, of course. If you’ve lost a job, suffered through a financially devastating divorce or death of a spouse, or if you’ve been forced to work at a job that pays less than your monthly payments owed, you aren’t purposefully financially irresponsible.

Unemployment and underemployment statistics show a significant number of Americans aren’t able to earn enough money to pay their bills.

Unfortunately, an insurance company won’t often make a qualitative assessment of your financial responsibility. An insurance underwriter will quote higher auto insurance rates to insure your vehicle, home, or assets than another person with a better credit score.

Some insurance companies know that economic conditions are tough, and they’re willing to offer auto insurance to individuals who’ve experienced a vehicle repossession. Of course, auto insurance will cost more after a repossession.

After you’ve reacquired the vehicle or obtained a new one, do everything possible to strengthen your credit score.

Seek credit counseling if you’re unemployed or in bad financial straits. Let creditors know you’re doing what’s necessary to rebuild your credit and demonstrate financial responsibility.

Repossession of an auto that you need for daily life and work is a nightmare. Before your car is repoed, do what you can to work out an agreeable payment arrangement with your bank or financing agency.

Most financial institutions understand that economic times are tough for many people, and they’re usually willing to help keep you on the road.

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What other factors affect my auto insurance rates?

In addition to your FICO credit score, insurance companies evaluate your age, driving history, and the vehicle you plan to insure, including how old it is, the make and model.

Some auto makes and models cost less to insure, according to the insurance company’s claims payment records.

Unfortunately, good drivers with a bad credit history will pay more for auto insurance. A good driver with an auto repossession on his credit file will certainly pay higher auto insurance rates.

Can I see my credit report?

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Yes and it’s a good idea to review your credit report prior to purchasing a new or used auto, or prior to applying for auto insurance.

Many credit reports have errors, so it’s wise to let the credit reporting organizations know you contest errors on your credit report.

Obtain a free copy of your credit report from each of the credit reporting agencies each year or, when unemployed or receiving government financial assistance, obtain your credit report several times per year for free.

An auto repossession is a disheartened occurrence. Know that obtaining comparative auto insurance quotes from a variety of insurance companies is your best bet in paying the lowest possible amount for auto insurance you need! Start now by entering your zip code.

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