Does car finance include insurance?

Car finance usually doesn’t include insurance. But it can, if you ask for it when setting up your agreement.

Most lenders focus only on the finance side. So when you get a car finance quote, assume insurance isn’t included unless it’s clearly stated. Some lenders do offer combined packages, but these are rare. It’s still worth asking your broker, as a few deals may include both and could help you manage your costs.

Before you can drive your car, you’ll need to arrange insurance yourself. At the very least, this means third-party cover — the legal minimum on UK roads. Finance agreements don’t just include this, so you’ll need to get it separately from an insurance provider.

If you’d prefer to keep everything in one package, speak to your broker early. They’ll let you know which lenders offer finance with insurance and help you decide if that option works for your budget.

Why does car finance not include insurance?

Car finance and car insurance are two separate products because they depend on different personal details.

Car finance is a loan based on your financial situation. Lenders check your credit score and your income to decide if you can afford the monthly payments.

Insurance is based on your driving history, age, location, and personal details. Insurers run their own checks to work out the risk and set the price of your cover.

Because both services need their own checks and approvals, they’re not usually offered together. That’s why insurance isn’t automatically part of a car finance deal.

The cost of car finance including insurance

Insurance in your car finance means higher monthly payments.

Some lenders or dealers give free insurance, but only with certain new cars and for a short time. And these offers don’t work for everyone. If you have bad credit (missed or late payments in your history) or lenders see you as high risk, the deal might not apply.

Speak to your broker before you choose anything. They explain your options and help you pick a deal that suits your budget.

Car finance with insurance add-ons

Some car finance deals let you include extra features, known as add-ons.

These can cover things like car insurance, road tax, or even servicing costs. Add-ons are optional, and each one will increase your monthly payment slightly. They’re helpful if you want to keep all your motoring costs in one place.

Think about what’s important to you and what fits your budget. Then talk to your broker to see what add-ons can be included in your agreement.