Is it mandatory to purchase insurance from a 4S store for a financed car?
2 Answers
Purchasing car insurance is mandatory when buying a car on loan, but consumers have the right to choose their insurance provider. Whether insurance must be bought at the dealership depends on the contract terms. If the loan agreement does not specify renewing insurance with a designated guarantor company, commercial insurance does not have to be purchased from the 4S store. Therefore, when financing a car purchase, it's important to check whether the 4S store requires customers to buy full coverage insurance from a designated provider. Since financed car purchases involve vehicle depreciation, even if a 4S store requires consumers to purchase insurance from them, they must offer multiple designated insurance options for consumers to choose from, and the prices should align with market rates. If prices are excessively high, consumers can negotiate with the 4S store or file a complaint, which will then be investigated and handled by regulatory authorities. Financed car purchases typically require the owner to buy full coverage insurance, which includes compulsory traffic insurance (mandated by the state), vehicle damage insurance, third-party liability insurance, scratch insurance, glass insurance, theft insurance, and waiver of excess for vehicle damage and third-party liability.
Regarding insurance for financed cars, I used to think it had to be done at the 4S shop, but after some hands-on experience, I've learned a few tricks. When you finance a car, the bank requires mandatory insurance coverage, such as comprehensive insurance and theft insurance, to protect their assets, but it doesn't specify that you must buy it from the 4S shop. The 4S shop pushes insurance for extra income, and sometimes the premiums are higher and not cost-effective. I went through this myself—when buying a car, the salesperson insisted I had to get insurance through them, and I almost believed it. Later, I checked the contract and realized I could choose my own insurer, as long as the beneficiary was listed as the bank. I’d advise new car owners to compare insurance options in the market first—online platforms are often much cheaper—and to be cautious when signing contracts to avoid bundled agreements. Saving money is key; last time, I saved thousands, and I still drive with peace of mind.
