You probably can't insure a car if you're taking over car payments for someone, unless you have been added to the borrower's loan contract and are recognized as a co-owner by the lien holder. If you are unsure as to whether or not you can insure the vehicle, contact your lender.
Contacting Your Lender
Call your lender to find out its insurance requirements. Most lenders require proof of insurance coverage before loan approval. If you haven't been properly added to the loan, you cannot call to obtain any loan information; the actual buyer must call herself. Some lenders may allow an insurance policy in a different person's name than the borrower if the insured person is added to the vehicle's registration. Otherwise, consider sharing an insurance policy with the original borrower instead so both names are on the policy.
Taking Over Payments
Most lenders don't allow another person to take over a car loan without submitting a credit application. Unless you are simply helping the original buyer by making her car payments, you may want to follow actual bank procedures in order to add yourself to the car's loan. Otherwise, you have no recourse with the vehicle's lien holder because you are not recognized as an owner. Consider officially taking over car payments as a recognized co-owner or sole owner; if the borrower isn't paying for her required insurance policy, the vehicle can be repossessed from you even though you're making payments.
Becoming a Co-owner or Owner
To go about taking payments over the correct way, you must purchase the vehicle from the original borrower. You may also ask to be added to the loan, although monthly payments may change based on interest rate and loan approval terms. If you are simply helping the borrower during financial distress, you may want to help with car insurance, as well. Otherwise, you can apply for a loan to purchase the vehicle. This way, you can also insure the vehicle and receive credit for your timely monthly payments.
If you can add yourself to the vehicle's loan or the lender allows an additional registrant, call your insurance provider to add the vehicle to your policy. Be sure to check with the lien holder to find out the amount of coverage it requires; many lien holders require collision coverage, reduced deductibles and higher liability limits. If you aren't going to purchase the vehicle and the lien holder requires its borrower to remain on an insurance policy, find out if you can add the borrower to your policy instead.
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