Your NY auto insurance rate is impacted by many factors, such as driving record, credit history, mileage, etc. Whether you choose to lease or finance a vehicle will not change your premium directly, but it still may impact your insurance in other ways.
When you finance a car to insure under your NY auto insurance policy, you are taking out a loan from either the bank or a dealership. You pay the loan off, including interest, in installments over a set period of time. Once the car is completely paid for, you become the sole owner of the vehicle. You will then receive the ‘clear title’ from the bank, which will no longer list the bank. At this point you may want to send a copy of the clear title to your NY auto insurance company so they can remove the bank from your policy. Furthermore, once the auto loan is paid off you can do with the vehicle as you please and you will no longer have to make monthly payments.
When you lease a vehicle, you can also add it to your NY auto insurance policy. Leasing a car is a lot like paying to rent a car; you will make monthly payments over a specified amount of time during which you cannot exceed a certain mileage. If you do exceed your mileage, at the end of the lease when the car is returned you will be charged fees. Additionally, you can be held liable for any damage to the car when it is returned to the dealership. When you lease a vehicle you are not the owner, so you must fulfill the terms of the lease and return the car once the lease is up. Some people prefer to lease as they like to get a new vehicle every couple of years and have lower monthly car payments. If you do opt for a vehicle lease keep in mind that you will continue to incur the expense of a monthly car payment throughout the duration of the lease.
When you finance a vehicle and you are in the process of paying off your auto loan, you are required to maintain physical damage coverage on your vehicle’s NY auto insurance policy. This includes both comprehensive and collision coverage. However, once the loan is paid off you will obtain full ownership of the car and can elect to remove full coverage from your NY auto insurance policy. Once you own the vehicle insure the vehicle at the state minimum limits of liability if you choose to do so.
As we already outlined, when you lease a car, you are not the owner of the vehicle. In this case, the bank or leasing company reserves the right to dictate the coverage on your insurance policy. Similar to insurance requirements when financing a car, you must maintain physical damage coverage on your car. However, at no point during a lease term can you remove this coverage from your NY auto insurance. Moreover, the leasing company may also require minimum liability limits. These limits can vary depending on the state and the bank, but more often than not, in NY, leased vehicles require bodily injury limits of 100K/300K and property damage limits of 50K. These higher coverage requirements can lead to increased rates on your NY auto insurance.
Whether you decide to lease or finance your vehicle, the bank will be listed as a lienholder on the policy. This allows the bank to obtain copies of your auto insurance policy and inquire about the policy status. This ensures the lender that their investment is being protected.
The choice to lease or finance a car is completely up to your personal preferences. Do you prefer the convenience of being able to trade in your vehicle every two or three years in favor of something newer and up to date? Do you want to put want to have lower (though always recurring) payments? Then maybe a lease is the way to go. Would you prefer to eventually own the vehicle outright and reap the benefits of its remaining value? Want to have the freedom to insure your vehicle on you NY auto insurance policy without full coverage? Then maybe financing a vehicle is the right choice for you.
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