These types of insurance are mandatory for any car loan whether the car is new or used. Comprehensive insurance will cover the damages due to theft or vandalism to the car whereas collision will cover the damages when a car is involved in a collision. Liability is of course, required by law in most states and will cover damages and injuries to the property of others.
A lending company will ask that all individuals they give a car loan to carry these insurances. The main reason is that if you default on the loan, the lending company will be able to sell the car and recoup the money let you borrow. If you are involved in an accident without insurance and the car, is damaged and is not drivable do you really want to keep paying on a loan for a car you cannot drive. The lending company will also not want a car they cannot sell in order to get the money from the loan you are not going to pay. The sad news is that if the car is totaled, you will still owe the used car loan. Therefore, it would be better to have insurance so the car can be repaired or replaced, you will still be able to drive the car, and the lending company will receive the money you borrowed. This insurance makes everyone involved happy.
When you get ready to shop for a used car and find the car of your dreams, it is best to compare insurance quotes from different insurance companies so you can get the best deal even before you purchase the car. Every insurance company will offer different rates and you may find that one will have a great price for comprehensive but be expensive for collision. To be sure you get the best rate ever is to compare different insurance policies as well as the benefits, and then you will be able to make an educated decision.
