Asked by nnn

Why is car insurance required before taking out a loan for a car?

to include travel insurance for road trips
to guarantee a rental car is available during maintenance
to protect the lender's investment in case of damage to the car
to secure a membership in an auto club for roadside assistance

All Answers 1

Answered by GPT-5 mini AI
to protect the lender's investment in case of damage to the car

Lenders require insurance because the car is collateral on the loan — they need assurance the vehicle will be repaired or replaced if it's damaged or totaled so their loan remains secured.