Does Car Insurance Affect Your Investment Mortgage Rates? 

When you apply for a mortgage to finance your investment property, you may wonder, does car insurance affect your investment mortgage rates? A car insurance policy is another form of financial responsibility.

As you know, when applying for a mortgage, lenders will take a thorough look at your financial history. This may include any car insurance policy that you made in the past. 

Especially, for an investment property, your past financial deals will be scrutinized to determine whether you’re worthy of loans.

For this reason, we have covered the information regarding car insurance and how it affects your mortgage rates.

In addition, we will also take a look at some of the most affordable car insurances to determine their impact on your credit score.

Car insurance and mortgage rates

As it has already been established, your mortgage rates depend on your financial history. Your financial history can be traced back using your credit reports which are used to generate a credit score.

When you apply for loans, your lender will examine your credit score to determine whether you’re financially responsible. If you are, you’re worthy of loans and might be eligible to get a lower mortgage rate.

Since your credit score takes into account all of your financial histories, you may wonder whether your car insurance policy affects your credit score.

The short answer is yes, your insurance policy payment may affect your credit score. When you’re late or don’t complete your car insurance policy payment, it may lead to debt collection reports. 

This report appears on your credit report for 7-10 years. As a result, you may receive a negative remark on your credit score.

Luckily, you can avoid all of these problems if you use one of the best cheap car insurance companies.

What is the cheapest car insurance?

Despite the hassle, car insurance provides a lot of advantages for your and your car. For instance, if you caused a car accident, you may be responsible for any expenses related to it.

These expenses may include medical expenses, legal fees, and loss of income. Not to mention that your car might be damaged from the accident. Without insurance coverage, you have to pay all of those expenses in your own pocket.

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According to a 2022 analysis by NerdWallets, the average cost of car insurance in the US is $1,630 per year. In Australia, the monthly car insurance cost ranges from $85.70 to $120, which made the average annual insurance cost $1,028.40 to $1,440.

If you’re financially capable to pay for those amounts, you don’t have to worry about your credit score. Otherwise, you might be unable to get low investment mortgage rates.

For this reason, you might want to consider insuring your care to one of the most affordable car insurance companies. So, here are some of our recommended cheap car insurance companies that you can find.

Bingle

Bingle is one of the top car insurance companies in Down Under. With an average annual premium cost of $628.11, Bingle is also one of the cheapest car insurance companies that you can find.

Their Comprehensive policy covers various events, such as theft, collision, flood, fire, and many more. On top of that, several users have reported that they are very pleased with this insurance company, particularly when getting a lease car.

NRMA

NRMA car insurance quote QLD is one of the cheapest in Australia. With only $700 to $800 of the annual premium, you will receive an insurance policy that covers a wide variety of events.

This coverage may include, up to $20 million legal liability, $500 insurance cover for a child seat, and up to $1000 for theft. So, you don’t have to worry about getting a poor credit score from failing to pay their monthly fee.

Root car insurance

Is Root car insurance legit? You may have heard that question asked by various drivers who want to insure their cars on this US-based insurance company.

However, after checking different reviews, we can ensure you that this car insurance company is legit. Root’s pricing for their car insurance policy depends on different factors, such as the car model, driver’s age, gender, and driving behavior.

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One of the advantages of Roots is its ability to keep the rates down. This is done by refusing insurance coverage for risky drivers.

Compared to other insurance companies on this list, Roots’ annual quotes maybe a little bit more costly. However, they’re still cheap enough to be payable. So, is Root insurance legit? We can assure you that they are, in fact, a legit car insurance company.

How to get your mortgage approved

Other than getting the most affordable cat insurance, there are several other methods that you can do to improve your chance of getting your mortgage approved.

  • If you have any car finance repayments, pay them on time. Any missed car finance payment will affect your credit reports. As a result, this will affect your chances of getting your mortgage approved.
  • Choose a cheaper and more affordable car. Affordable cars typically come with smaller car finance payments. With small car finance payments, you’ll be able to pay them more on time and earlier. As a result, your credit score is improved and you’ll have a higher chance of mortgage approval.
  • Clear any debt that you have. These debts may include a car insurance policy, credit cards, and an overdraft. The lesser the debt that you have, the better the credit score that you have.

Conclusion

So, do car insurance payments affect your investment mortgage rates? Yes, they are. When you’re late on paying your car insurance, or even not paying it at all, it will give a negative remark on your credit reports.

If you have a poor credit score, your will likely receive a higher mortgage rate. Even worse, your mortgage application might not be approved by lenders.

So, be sure to improve any car finance that you have. You can do this by paying them on time or even paying them early.

Besides those two methods, you can also ensure your car is on the cheapest car insurance company that you can find. When finding one, make sure to read the list above to find out who has the cheapest car insurance.