Auto insurance: Second and third chances for auto credit

You’ve all seen those car dealership ads that sell dreams by promising a second or third chance at credit. In this article, Assurances Multi-Risques provides you with all the information you need about this type of credit. We’ll be discussing the impact it can have on your car insurance.

Who are second or third chances at credit for?

Life isn’t always easy: job loss, unemployment, mounting debt, collection issues, etc. Sometimes, despite our best efforts, bad luck strikes and affects our credit report.

When we talk about second or third chances at credit, we are referring to non-traditional loans, or “substandard” or “non-standard” creditors. These loans are for people with poor credit ratings who have been refused financing by banks.

The impact of second chance credit on your auto insurance

When choosing your auto insurance, your insurer will ask you for several pieces of information, including the name of the lender with whom you arranged your car loan. At that point, they may refuse to insure you because of your high-interest auto loan.

If your interest rate exceeds 10%, there is a strong possibility that you will be denied insurance on the standard market. Furthermore, the fact that you have used non-standard credit is evidence of your poor credit rating.

Why would someone be denied auto insurance?

Property and casualty insurance is primarily based on statistics such as the frequency of claims, the costs associated with them, and the profile (age and gender). As you may have guessed, the credit rating of policyholders is also taken into account!

By collecting data, insurers have found that people with below-average credit scores are more likely to make a claim than those with higher credit scores. That’s why some people get turned down!

When a consumer purchases or leases a vehicle using second or third chance credit financing, it often means that they are attempting to rebuild their credit rating with credit agencies.

Insurers and high interest rates

Some insurers are more reluctant to offer insurance when a creditor or landlord with high interest rates is involved. The same could apply to people who have gone bankrupt.

With slogans such as “Second chance credit” and “No application refused,” substandard lenders advertise themselves as saviors. However, opting for second chance financing not only means very high interest rates, but also complications with your insurer.

The amount of the insurance premium

To obtain auto insurance after taking out such a loan, you will likely need a specialized insurer. How can you find one? Simply contact an insurance broker specializing in “non-standard” insurance, such as Assurances Multi-Risques.

We work with insurers who accept applications that are rejected by the regular market. But all this comes at a price. Your car insurance premium will be higher, but at least you’ll be well protected!

It is often essential to own a vehicle for our daily lives, especially for getting to work! If you don’t have a good credit rating, you may need to resort to second or third chance credit, and we completely understand that.

That’s why, as independent brokers, we always strive to offer the best coverage at the best possible price to all our clients, regardless of their situation!

Other reasons for refusing insurance

There are many reasons why an insurer might refuse to insure you. We mentioned that a very high interest rate on your car loan is one of them, but what other reasons might cause an insurer to reject your application?

Frequent claims

Indeed, frequent claims can negatively impact your insurance record. To give you a quick overview: this frequency increases the risk your insurer takes on to insure you. It can undermine its fairness, which is essential to protect for its customers and its professional integrity.

Suspension of driver’s license and traffic violation

Have you accumulated a number of traffic violations (speeding,drink driving, etc.)? Your premium may have increased dramatically. Or your insurance company may have refused to insure you.

In the case of a driver’s license suspension, it’s pretty much the same story. You may be refused coverage, even if you knock on several doors—and even if you’ve made amends.

Criminal record

Many people are surprised to learn that the repercussions of a criminal record go beyond credit reports and employment rights. It is more difficult to obtain insurance when you have a criminal charge against you. However, it is still possible to obtain a second chance insurance policy at an affordable price.

Here, transparency is always key. Omitting or avoiding sharing these details with your current or potential insurer could put you in a very awkward position!

Why trust Assurances Multi-Risques for second chance insurance?

Here, we trust you. We take on the risks that prompt you to apply for second chance insurance.

Why? Quite simply because our insurers have decided to lend a helping hand to those less fortunate than ourselves. Because, at the end of the day, no one is truly immune to misfortune!

That’s why, as independent brokers, we always strive to offer the best coverage at the best possible price to all our clients, regardless of their situation!