Am I required to only have full coverage on a car I'm financing with Carmax?

Question

I'm tired of paying full coverage!!! If I switch it what's going to happen, will they inform Carmax? Will I be in trouble?

Answer 1

most lenders require full coverage since they technically own the asset (your car) and are letting you drive it. it is one way to ensure they will not lose money on the loan

Answer 2

was full coverage a requirement on behalf of carmax?

since the car is still carmax's, you have to abide by their rules. *yes, i know you're paying for it, but they're financing YOU, which means it legally is THEIR car. most dealerships require full coverage on their cars.

look at the disclosure you signed when buying that car.

Answer 3

Chances are....if you try to drop your "full" coverage, your insurance company will ask for proof there is no lein. When you can't show proof they'll check with your leinholder to see if they still have a financial interest in the vehicle. They will say yes, and they won't let it happen.

Answer 4

yes, you'll be in trouble

CarMax sold the loan to some lender.  The contract gives that lender the right to force you to carry the coverage specified -- almost always "full" coverage.  This protects the lender's repayment should the car be totaled.

Forced coverage is hideously expensive -- the underwriter for it always assumes that you can't get coverage any other way because your driving record is awful.

AND, the cost of forced coverage is added to your monthly payment -- pay or be repo'd.

The way you get out of this is to pay the loan off.

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you next best bet on saving money, if the loan contract allows it, is to increase your deductible.

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Now that you've discovered huge insurance expense, make your next car used and enough cheaper that you can pay cash for it.  [After this one dies, of course.]

Then you're free to drop collision and comprehensive when the car's value becomes small.

Answer 5

If your finance company, carmax, requires full coverage, you must keep it in force. They will be notified as the lien holder that your coverage has expired.

They can then purchase ANY full coverage they want, at ANY price, and then add that cost to your loan.

You might want to look at what is called "GAP" coverage because I'm sure if you went to carmax, you owe a lot more than the car is worth so if it gets totaled, you not only loose your car, but you still owe carmax a ton of money.