Credit shortfall insurance cover


Credit shortfall insurance, the type of insurance that you would take up when you are purchasing a car in case there is a short fall between the insurance amount that you've been insured for but also how much you actually owe the bank. 

Now remember, that none of my videos constitutes as financial advice. If you are looking for financial advice, please speak to somebody who is certified and registered with FSCA. let me talk a little bit about why you would need such a thing as credit shortfall insurance. 

So this is generally also called top up cover or gap cover, and basically it covers that gap that may potentially happen if the retail amount of money that your car is insured for is actually lower than what you owe the bank. 

To give you a scenario, let's say for instance, you have bought a car, everything is all exciting, and you're just excited about it. But maybe you have taken a very high interest rate on the financing of your car, right? So the actual amount of money that you may potentially be owing the bank is higher than what your car is retailing for. 

And generally the retail amount of money is what insurance companies generally cover you for in case your car gets written off. Or maybe, perhaps your car is stolen, hijacked and is not recover, right? 

So let's say you owe the bank maybe three hundred twenty thousand rand ( R320 000.00) and after a couple, we know couple of months, the moment you drive your car off the dealership floor, it already loses some level of value, right? So let's say for instance, your car then is insured for R280 000.00 but you owe the bank R320 000.00 right, so there's already shortfall between the two monies. 

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