We were thinking about those of you out there who are buying a car and using finance to seal the deal. It’s so easy to focus on the monthly repayment when you’re wrapping things up, but actually there’s another number that matters just as much… How much your insurer will pay out if the car is written off or stolen.
And here’s the catch: That amount might not match what you still owe the bank.
That’s where credit shortfall insurance enters the runway, in all its buttoned up, prepared for anything glory. This isn’t something that’s included with your comprehensive car insurance. You’d have to look at what it is, weigh up the risk of not having it, and make your choice.
We can help you do just that.
Who should seriously consider it
We’re going to kick things off by telling you who should look at this option. Off the face of it, we’d say that it’s especially relevant for anyone who wants to avoid paying off a car they no longer own.
Here’s a neat list of who should get credit shortfall:
- You’re buying a new car using finance.
- You’re paying off your loan over 5 years or more.
- You didn’t pay a deposit or trade in a previous car.
- You’ve got a balloon payment on your deal.
What is credit shortfall cover
Now to the nuts and bolts of the topic. Shortfall credit cover is a policy that you opt to add onto your main car insurance cover for extra financial protection. Protection? Yes.
Essentially, if something happens to your car and it’s lost forever, then credit shortfall cover will pay the difference between what your car is worth (as is noted on your royal insurance policy) and what you still owe the bank.
It’s basically gap cover for your car, specifically for if your car is written off or stolen.
A great example:
You buy a car for R400,000 and after a year, you still owe R370,000 on your loan. Your car’s retail value is R320,000, which is what its insured for. And then sadly, your car is stolen, never to be seen again. Your insurer steps in and does the whole payout, which as you remember, is R320,000.
But you’re still left with a R50,000 shortfall. Who’s going to pay the bank what’s still owed? If you have the king’s credit shortfall, then we’re here for you. We’ll pay the bank directly on your behalf, so you don’t have to keep paying for a car you no longer have.
Why is there even a shortfall
Good question. The main reason why this gap even exists boils down to a few reasons.
Mainly, the shortfall exists because of:
- Depreciation. A car starts losing value the moment you drive it off the lot.
- Finance terms. Balloon payments, high interest rates, and long loan periods can all mean you owe more than the car is worth.
- No deposit deals. Tempting at the time… But risky if you don’t have a buffer.
When should you get it
Before you drive away in your new (or new-to-you) car, add the king’s credit shortfall cover to your comprehensive car insurance. If your car gets written off just a week after buying it, and you don’t have credit shortfall cover yet, it’s already too late. Thankfully, we’ve made it ridiculously easy to add credit shortfall to your policy.
Don’t wait for a worst-case scenario. Add credit shortfall to your car insurance today, just WhatsApp us on 0860 50 50 50 or click here for a commitment-free quote.
FAQs
1. Can I get credit shortfall cover if I didn’t buy my car with finance?
No. It only applies if you have an active car loan.
2. Does credit shortfall cover balloon payments?
Yes, it can cover balloon payments, as long as they’re disclosed when you take out the policy.
3. Will my insurer automatically add credit shortfall cover?
No. It’s an optional extra that you’d need to get a quote for and add to your policy.
4. Can I get credit shortfall after buying the car?
Yes, but the sooner, the better. You must have it before a claimable incident happens.
5. Does King Price offer credit shortfall cover?
Absolutely. It’s quick to add and easy to claim when you need it most.