Recent data suggests that the average driver will spend close to $100,000 onÂ car insuranceÂ over their lifetime. That’s a staggering sum of money, especially when you consider estimates that suggest Americans will pay over $500,000 in that time just to own, operate, and maintain a car.
$100,000 is a lot of money to spend on something that you may never benefit from, something that you’re only buying because your state authorities told you too. But whileÂ carÂ insuranceÂ policiesÂ are essential, the amount that the average consumer spends on them is not.
In this guide, we’ll look at the ways you can save money onÂ autoÂ insuranceÂ premiumsÂ and get the most value out of this necessary expense.
Build YourÂ Credit Report
Never underestimate the value of a highÂ credit scoreÂ and a cleanÂ credit report. Not only can it help when applying for a car loan, increasing theÂ valueÂ of the carÂ you can purchase and decreasing the interest rates you’re charged, but it will also reduce yourÂ carÂ insuranceÂ rates.
There is no easy and quick way to turn a badÂ credit reportÂ into a goodÂ credit report, but there are a few simple changes you can make that could increase your score enough to make a difference. These include:
- Stop applying for new lines of credit.
- Become an authorized user on a respectable user’s credit card.
- Increase credit limits on your active credit cards.
- Pay off as much debt as you can, focusing on credit cards and personal loans first.
- Don’t close your credit card accounts after clearing them.
If you don’t have any credit at all, which is true for many teen drivers getting behind the wheel for the first time, try the following options:
- Credit builder loans
- Secured credit cards
- Lending circles
Choose Your Car Carefully
AÂ new carÂ is a great way to get a high-tech, customized vehicle, but it’s not ideal if you’re looking to save onÂ insurance costs.
New vehicles cost more to insure because they are a greater liability, with more expensive parts and greater overall value. If you want to save on yourÂ autoÂ insuranceÂ coverage, look for a car that is at least a few years old, has a number of safety features and a high safety rating.
The cheaper, the better, but only to a point. You want something that won’t leave you in complete financial ruin if it’s wrecked in aÂ car accidentÂ and you don’t have the insurance to cover it, but something that won’t breakdown every few miles and leave you stranded and broke every other week.
Drive Safely and Prove Your Worth
YourÂ driving recordÂ is just as important as yourÂ credit report, if not more so. The more at-fault accidents, traffic tickets, andÂ insurance claimsÂ you have, the higher yourÂ carÂ insuranceÂ ratesÂ will be.
A single conviction won’t last forever and the impact will eventually dissipate, so even if you have a few blemishes on your record now, just keep driving safely and you’ll be able to reap the benefits before long.
It takes time to prove your worth toÂ insurance companies, but there are a few things you can do to expedite this process. The first is to take aÂ defensive driving course. In some states and for some demographics (mostly seniors and young drivers), you’ll be offered a discount for completing one of these courses.
The next step is to consider a usage-based program. These are offered by most majorÂ insurance companiesÂ and can track yourÂ driving habitsÂ to determine what kind of driver you are. If you’re driving safe and doing veryÂ low mileage, you could start seeing some noticeable changes in just a few months. The majority of providers will even give you a discount just for signing up.
Pay Everything Upfront
Most policyholders pay their premiums monthly and it may seem like thatâs the best thing to do. $100 a month seems infinitely more manageable than $1,200 a year.Â
It is an attitude that many people have, and itâs one that often leads to debt and poor decisions.
Millions of Americans have credit card debt because a $200 monthly payment seems more achievable than a $5,000 payoff, even though the former carries a phenomenal interest rate. It’s also why countless first-time buyers rush into getting mortgages with small down payments and high-interest rates, even though doing so could mean they are paying twice as much money over the term.
Whenever you can benefit from making an upfront payment, do it. This is true for your loan debt and credit card debt, and it’s also true for yourÂ carÂ insuranceÂ premiums.
Many insurance providers offer you an upfront payment discount of up to 5%. It doesn’t sound like much, but every little helps. If you have a $3,000Â carÂ insuranceÂ policy, that 5% adds up to $150. Add a few more discounts and you can save even more money and make an even bigger dent in yourÂ insurance rates.
Combine Policies and Vehicles
Insurance companiesÂ that offer multipleÂ types of insuranceÂ tend to offer discounts when you purchase several products from them.
Known as multi-policy discounts or “bundling”, these offers are common withÂ homeowners insuranceÂ andÂ auto insurance, but they are also offered withÂ rentersÂ insurance andÂ life insurance.
You can combine several vehicles onto the sameÂ autoÂ insuranceÂ policy, as well, saving much more than if you were to purchase separate policies.
These discounts are essential for multi-car households, but they are not limited to cars. Many insurers will also let you add boats, ATVs, motorcycles, and other vehicles onto the same policy.
Before you settle on a single policy,Â shop around, compare as manyÂ car insuranceÂ quotesÂ as you can, try multiple different insurance options (uninsured/underinsuredÂ motoristÂ coverage,Â comprehensive coverage,Â collision coverage) and make sure you’re getting the lowest rates for the best cover.
Too many drivers make the mistake of going with the same provider their friends or parents have; the same provider they have used for a number of years. In doing so, they could be missing out on huge savings.Â
You could be forgiven for thinking that all providers offer similar rates and that the difference between them is minor. But regardless of your age, gender, and state, the difference between one provider and the next could be up to 200%!
Check if You’re Covered Elsewhere
CarÂ insuranceÂ companiesÂ offer a number of add-ons and optional coverage options. These are enticing, as they cover you for numerous eventualities and some of them cost just a few dollars extra a month. But all of those dollars add up and could result in you paying much more than you need for cover you already have.
Roadside assistance is a great example of this. It will help you if you are stranded by the side of the road, assisting with services such as tire changes, fuel delivery,Â towing, and more. But if you have a premium credit card or are a member of an automobile club, you may already have that cover.
The same goes for rental car coverage, which is often purchased at the rental car counter. Although it has its uses, if you have anÂ autoÂ insuranceÂ policy, travel insurance, and a premium credit card, you’re probably already covered. In fact, many Visa credit cards offer this service completely free of charge when you use your Visa to pay the bill, but only if you reject the waivers sold by the rental car company.
Bottom Line: BestÂ AutoÂ InsuranceÂ Companies
âCarÂ insuranceÂ coverageÂ varies from state to state and provider to provider. There is no “best” company, as even the ones with consistently affordable rates will not be the best option in all states or for all demographics.
In our research, we found that GEICO was consistently one of the cheapest providers for good drivers, bad credit drivers, and even high risk drivers. GEICO also offersÂ personal injury protection,Â collision insurance,Â medical payments,Â uninsuredÂ motoristÂ coverage, and more, making them the most complete provider for the majority of drivers.
However, in some states, local farm bureaus come out on top, offering very cheapÂ bodily injuryÂ liabilityÂ coverageÂ andÂ property damageÂ liabilityÂ coverage, and giving policyholders a level of care and attention that they might not find with the bigger, national providers. USAA, which offers cheapÂ car insuranceÂ to members of the military, also leads the way in the majority of states, but only for those who meet the criteria.
Simply put, there is no right insurance provider for you, just like there is noÂ right coverage. That’s why it’s important toÂ shop around, chop and change your coverage options, and don’t assume that any type of coverage or provider is right for you until you’ve looked at the numbers.
How To Get The Most Out Of Your Auto Insurance Coverage is a post from Pocket Your Dollars.
Weâve been hearing about electric cars for a while, but it sometimes seems that the only people who buy them are either very into being energy efficient or very wealthy. But there are a lot of good reasons for you to consider buying an electric car. They are good for the environment, but they can also be good for your pocketbook. And who doesnât want to satisfy the demands of their conscience and their bank account at the same time?
Check out our cost of living calculator.
1. Electric cars help the U.S. with energy independence.
The United States spends about $300 billion importing oil into the country. Thatâs two-thirds of the U.S. trade deficit. Being dependent upon foreign oil leaves the United States more vulnerable to international problems and fluctuations in the supply of oil abroad.
2. Electric cars are more efficient.
With an electric car you never have to stop for gas. You can charge your electric car in your own garage overnight and be ready to travel wherever you want to go in the morning. In addition, you wonât be wasting any time or money buying snacks or pumping gas at the gas station.
3) Youâll likely save money.
Even though oil prices are the lowest theyâve been since 2008, electricity is still the less expensive option. Right now, if you purchase an electric car, recent data shows you will spend $3.74 worth of electricity to travel 100 miles. However, if you purchase a comparable car that uses gasoline, it will cost you about $13.36 to travel 100 miles. In addition, gas prices have a way of rising (or at least being unpredictable), so that journey of 100 miles can quickly get even more expensive for people with conventional cars.
4) You can get paid to buy an electric car .
Right now, the federal government offers a tax credit that can reduce the cost of a new electric car by up to $7,500. That can effectively eliminate the cost difference between a gasoline-powered car and an electric car. Sometimes it can even make the cost of buying a gasoline-powered car more than the cost of buying an electric car. However, the tax credit offer might not last forever, so you might want to buy an electric car sooner rather than later if thatâs an important factor for you.
Related Article: 3 Tips for Claiming the Energy Tax Credit
5) Theyâre Low Maintenance
With an electric car youâre not going to have to take your car to the mechanic as often. Although all cars may have problems, electric cars generally have lower maintenance costs than gasoline-based car. With an electric car youâll also spend less time worrying about how to get by while your car is in the shop, or waiting around at the garage for the maintenance to be performed.
You donât have to be a hippie or a billionaire to opt for an electric car. There are advantages for anyone who takes relatively short car trips and has access to charging facilities.
Photo credit: Â©iStock.com/Anna Bryukhanova, Â©iStock.com/Drazen Lovric, Â©iStock.com/stockvisual
The post 5 Reasons to Buy an Electric Car appeared first on SmartAsset Blog.
Car manufacturers have been feeling the strain during the financial crisis. There are fewer cars on the road, workers in the factories, and consumers willing to spend, and as a result, the automobile industry has been devastated.
But manufacturers and showrooms are fighting back, finding ways to encourage consumers to buy and to make life easier for the ones that already have. In this guide, weâll look at the ways that auto lenders are helping consumers hit by the crisis and the ways that manufacturers are encouraging more drivers to purchase.
Financial Crisis Auto Relief: Manufacturers
Automobile manufacturers saw their profits free-fall in March 2020 and that followed into April, with suggestions that the chaos will progress as the year (and the pandemic that has gripped it so fiercely) continues. They are struggling and their customers are struggling as well.
Over 700,000 Americans lost their job in March and unemployment is set to rise to levels that havenât been seen for years. To make matters work, the countryâs 9.5 million+ self-employed workers have seen their incomes half.Â
As a result, many are struggling with their debts and finding it harder to meet auto loan payments. To lend a helping hand, many of the worldâs biggest manufacturers have established auto loan relief programs:
Ford announced its response to the crisis towards the end of March. Known as the Built to Lend a Hand program, it offers up to 6 months payments on a brand-new Ford and applies to all models from 2019 and 2020.
As soon as consumers sign up, they will be given 3 months of payments from Ford, while an additional 3 months can be deferred as per the customerâs request. The customer can choose to defer these payments as and when they want, but they must get their auto loan through the Ford Credit program to apply.
South Korean manufacturer, Hyundai, was one of the first to offer an auto loan relief program. South Korea was one of the hardest-hit countries in the early stages of the virus and this led to the major automobile brand offering a relief program in the middle of March.
Known as the Assurance Job Loss Protection, this program first appeared following the 2008 recession and has been revived for the recent pandemic.Â
As part of this auto loan relief program, consumers who bought or borrowed a car after March 14 can have up to 6 payments made by Hyundai. They can also request payment deferment that lasts for up to 90 days.
The Assurance Job Loss Protection program is set to run until April 30 and applies to everyone who purchases a Hyundai through eligible finance programs. It also extends to Genesis, the luxury division of Hyundai Motors that is responsible for new vehicles such as the 2020 Genesis G90.
If the pandemic continues to grow in scale and severity, the program may be prolonged, although only time will tell.
Nissan is following in the footsteps of many major creditors and lenders by working with customers on a case by case basis. If youâre feeling the strain of the crisis, whether because youâve lost some or all of your income or your expenses have increased, you can contact them and request some relief.
For borrowers struggling to meet monthly payments, Nissan offers deferred payments, but only if hardship can be proved. You likely wonât be offered anything just because you ask for it and must show that your financial situation is worse now than it was before the financial crisis.
The same applies to all Infiniti car owners, which is Nissanâs luxury brand.
Kia announced that all 0% APR borrowers could defer payments for up to four months. Borrowers who donât qualify for this can still request deferment of up to 30 days on 3 different occasions.
However, as with Nissan and many other providers, borrowers need to prove that they are experiencing hardship to be offered this auto loan relief.
GM has seen some pretty hefty losses during the financial crisis, and this is despite the fact that it began the year on a high note, making noticeable gains that were all but wiped out in the first couple weeks of March.
GM is offering a few different options to keep consumers happy and to ensure cars are still driven out of the showroom. If you already have a finance program with General Motors, and youâre experiencing hardship, you can contact GM directly, tell them what youâre going through, and get assistance.
The GM OnStar program has also been activated for all current owners. This program offers 24/7 emergency assistance and can help you get to a hospital in your time of need.
If you need a new car, you can get 0% APR for up to 84 months on most GM manufactured vehicles.
Fiat Chrysler is another brand that began 2020 with a bang and then quickly suffered a substantial slump. To counteract this, it has improved its online offerings, allowing all consumers to purchase a brand-new vehicle online and to benefit from improved financing offers when they do.
In addition, Fiat Chrysler is assisting current owners by making it easy for them to pay their bills.
If you have a car made by this leading manufacturer and youâre struggling to make payments, contact them directly, tell them about your financial hardship, and they may offer to help you with deferred payments and other solutions.
Financial Crisis Auto Relief: Alternative Options
Contrary to what you might think, lenders are not desperate to get their hands on your collateral. The best outcome for them is that you meet your payments and they get every penny of the vehicleâs value along with the interest.
If you default and they are forced to repossess, they need to pay for the repossession, deal with the extra paperwork and hassle, and eventually sell the car for much less than it is worth. They can still chase you for what you owe, but they know they probably wonât get it, making repossession something that lenders are keen to avoid.
When youâre struggling to make your payments, be honest with them, lay it all on the line, and find a compromise. They will probably be a lot more forgiving than you expect, especially during the crisis, when everyone is more understanding and willing to help.
Unfortunately, you donât have many other debt relief options when it comes to auto loans, as it doesnât make sense to do a balance transfer and debt settlement simply doesnât work here. But if you contact your lender, theyâll help you find a solution.
You can think about returning the vehicle, as well. When you lose your job and your income, and you no longer need to drive several miles to and from work every day, whatâs the point of owning a car that costs you tens of thousands of dollars and leaves you with a substantial debt?
2020 Financial Crisis Auto Loan Relief is a post from Pocket Your Dollars.
Timing is everything and when it comes to buying a car, that saying couldnât be more true. Negotiating and haggling with car salesmen can reduce the price of what you have to pay for a new whip. But if you want to get the best deal on a car, youâll need to know when to show up to the dealership. Whether youâre buying a used vehicle or a brand new ride, weâll tell you the best time of year to buy a car. Being that the purchase of a car is rather pricey, consider meeting with a financial advisor in your area to discuss your finances beforehand.
When Is the Best Time to Buy a New Car?
If youâre on a budget, one of the best times to buy a new car is the end of a model season. New car models are often introduced each year between late summer and early fall. While you might miss out on some new features, buying a new car in August or early September may save you some money.
Waiting until the end of the year to buy a new car can work in your favor as well. Many car dealers offer year-end sales in an effort to get rid of older vehicles and make room for new inventory. Buying a new car on a holiday like Christmas Eve or New Yearâs Eve is another way to get a deep discount.
If you canât wait until December to get a new car, you might want to buy a car at the end of the month or the end of a quarter. If a salesperson hasnât sold very many vehicles in weeks, he or she might be willing to compromise and lower the price of the car you want to buy. Even if a salesman has managed to sell multiple cars throughout the month, he might want to close one last deal in order to meet a sales goal or score a bonus.
Shopping for a car at the end of the day may or may not be effective. If you stop by a dealership an hour before itâs set to close, a salesperson may be open to negotiating so that he or she can end the day on a high note. But if he or she is used to working long hours, your sales associate may not be that flexible.
The Best Time to Buy a Used Car
A recent study from iseecars.com ranked the best times to buy a used car. At the top of their list are holidays including Black Friday, Veterans Day, Thanksgiving and Columbus Day. The months of November and December are also considered good times to purchase a used car.
According to the study, the months of April, May and June are some of the worst times to buy a used car. Specifically, Easter, Motherâs Day and Fatherâs Day are bad days for used-car buyers. But the No. 1 worst day to purchase a used car is the Fourth of July.
When Not to Buy a New Car
Generally, one of the worst times to buy a new car is in the spring. During this time of year, youâll see more people on car lots looking to soak up some sun and cash in their tax refunds. Other bad times to shop for new cars are whenever a particular vehicle is popular among consumers and whenever a new car model has been released.
Some people seem to think that buying a car on a rainy day is a good idea. But that approach usually doesnât work. In fact, you can expect car dealerships to be filled with people when thereâs bad weather simply because people tend to believe that theyâll find great deals on rainy days.
The best time of year to buy a car ultimately depends on your personal preferences and how much youâre willing to spend on a vehicle. If youâre rolling in dough and you want your car to have top-of-the-line features and amenities, you might want to buy a car as soon as a new model comes out. But if youâre trying to shave hundreds of dollars off your purchase price, experts say that itâs best to head to the dealership at the end of a period in the fall or winter, like the end of the month, quarter or year.
Our advice? When it comes to buying cars and getting your way at the dealership, it helps to know what youâre looking for. Doing plenty of research and knowing the make and model that you want your car to have can make it easier to figure out when to purchase your new vehicle.
Tips for Taking Care of Your Finances
- If you find yourself having some financial struggles, perhaps itâs time to have an outside resource step in to help you out. Financial advisors typically have extensive experience in a number of important areas of finance, like tax planning, retirement planning, budget planning and more. SmartAssetâs advisor matching tool can set you up with as many as three suitable advisors in just 5 minutes. Get started now.
- The best way to manage your money on both a short- and long-term scale is to create a firm budget. SmartAssetâs budget calculator can help you figure out exactly where youâre overspending.
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The post When Is the Best Time to Buy a Car? appeared first on SmartAsset Blog.