Is a renewal insurance deposit required for car loans?

[SanMiguel]

Paying a renewal insurance deposit is a mandatory requirement for most 4S dealerships when purchasing a car on loan. Below are the benefits for 4S dealerships when customers pay a renewal insurance deposit: 1. High commissions: 4S dealerships can earn substantial commissions when customers purchase insurance. With more cars sold, the potential profit for the dealership increases significantly. 2. Encouraging customers to return for repairs after claims: This is the most important and profitable aspect. Accident-related repairs can account for up to one-third of the total after-sales service revenue. If customers purchase insurance through the 4S dealership, they are more likely to return for repairs after filing a claim. Many customers tend to go back to where they bought their insurance for repairs, significantly boosting the dealership's income.

[ClaraRose]

I've taken out a loan to buy a car before, and I did encounter the issue of insurance renewal deposits. The dealer asked me to pay around 2,000 yuan as a guarantee for insurance renewal, saying they didn't want to take the risk in case of an accident during the loan period. The deposit is usually specified in the contract and refunded if the insurance is renewed on time. However, this isn't mandatory; if you don't pay it, the interest rate might be slightly higher, or you might have to choose specific insurance products. Later, I found out that some major financial institutions no longer enforce this deposit, such as banks offering car loans. It's advisable for buyers to ask more about the details, carefully review the refund conditions before signing the contract, and not be fooled. At the same time, compare the options of paying in full or in installments to save wherever possible.

[VonAllison]

From a cost-saving perspective, paying a renewal deposit seems like an extra expense. I think it's mainly a risk-prevention tactic by lenders—if you don't renew the insurance and the car gets damaged, they have recourse. The deposit amount varies, usually calculated as 1% to 3% of the car's value. Not paying it may affect loan terms, such as indirectly raising interest rates or adding processing fees. The upside is that the deposit earns no interest and just sits there. Nowadays, the market has changed, and in highly competitive areas, insurance requirements are being simplified—opting for online loans might help avoid it. Crunch the numbers to see if it's worth it overall; remember the deposit is refundable, but you must ensure timely renewal without any slip-ups.

[SabrinaRose]

When I was considering financing a car, I wondered if the renewal deposit was necessary. The salesperson explained that it's called an insurance deposit, meant to ensure you renew your car insurance during the loan period to avoid issues in case of damage or theft. In most cases, you can choose to pay it or not; not paying might make the terms a bit more complicated. As a friend mentioned, if you renew your insurance on time, the deposit is refunded, so there's no loss. However, beginners should pay attention to the contract details, check the breach clauses, and not overlook anything to save time on minor things.