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Overview: What is Creditor Insurance?
Creditor insurance is important when getting a loan for powersports equipment because it helps protect the borrower from financial loss in the event of death, disability, or job loss.
It provides peace of mind for the borrower and their family by ensuring that they are protected in case of unexpected events.
Creditor insurance can pay off the remaining loan balance or make loan payments on behalf of the borrower, helping to reduce the risk of default and ensuring that the loan is paid off even if the borrower is unable to make payments.
Main Types of Creditor Insurance
Disability insurance: Covers loan payments in the event of disability, ensuring that the loan is paid off even if the borrower is unable to work.
Life insurance: Pays off the loan balance in the event of death, so that the borrower's family is not responsible for the debt.
Job loss insurance: Covers loan payments in the event of job loss, so that the borrower does not fall behind on payments.
Critical illness insurance: Pays off the loan balance or makes loan payments on behalf of the borrower if they are diagnosed with a critical illness.
Involuntary unemployment insurance: Covers loan payments in the event of involuntary unemployment, so that the borrower does not fall behind on payments.
What is GAP insurance?
Guaranteed Asset Protection insurance, otherwise abrevited as GAP insurance, is an optional coverage for vehicle owners that helps cover the difference between the outstanding balance on a vehicle loan or lease and the actual cash value of the vehicle in the event of a total loss.
In other words, if a vehicle is stolen or declared a total loss in an accident, and the insurance payout is not enough to pay off the outstanding balance on the loan or lease, GAP insurance will cover the difference.
This can protect the vehicle owner from having to pay out-of-pocket for a vehicle they no longer have.
GAP insurance is often offered by car dealers, finance companies, and insurance providers and is usually sold when a vehicle is purchased or leased.
The cost of GAP insurance varies depending on the coverage selected, the cost of the vehicle, and other factors.
It's important to note that GAP insurance is not required by law, but it can provide peace of mind for vehicle owners who have a loan or lease on their vehicle.
What is VRC Insurance?
Vehicle Return Coverage, or VRC for short, is a type of insurance that provides protection for vehicle owners in the event that they need to return their vehicle due to a specified reason, such as a change in financial circumstances, a change in employment status, or a medical condition.
VRC insurance typically covers the difference between the amount owed on the vehicle loan or lease and the actual cash value of the vehicle, up to a specified limit.
This can help the vehicle owner avoid financial loss and potential damage to their credit score if they need to return their vehicle.
VRC insurance is often offered by car dealers and finance companies as an optional add-on to a vehicle loan or lease.
The cost of VRC insurance varies depending on the coverage selected, the cost of the vehicle, and other factors.
It's important to note that VRC insurance is not required by law, but it can provide peace of mind for vehicle owners who may need to return their vehicle unexpectedly.
Before purchasing VRC insurance, it's a good idea to review the coverage details, exclusions, and costs to ensure that it meets your needs and budget.
Each type of creditor insurance offers different levels of protection and coverage. It is important to carefully consider the different options and choose the one that best suits your needs and financial situation.
The Powersports Link Financing Goal
We strive to offer the most competative and tailored financing options to all of our clients.
Our goal is to empower our current and future customers by providing the information they need to make responsible financial decisions.
We are not financial advisors but we do have the best interests of our clients in mind. It is our intention to provide quality information in a concise and efficient way.
With that being said, the information in this blog is being provided as a tool to help educate and should not be used as ones primary source of data for making financial decisions. Each situation is unique and needs to be approached in a unique manner.
Make sure to do an adequate amount of research before uptaking any serious financial decisions.
If you need more assistance or have any additional questions please feel free to contact us.
Never make any financial decisions if you do not feel you understand every aspect of the situation in detail.