Saving Money
Cutting Car Costs
Cars and trucks can be expensive! According to Edmunds.com, the average buyer pays just over $26,000 for a new vehicle. In addition, consumers are now stretching out their loans to an average of 62 months – just over five years. That means a typical car loan of $23,801 for five years at 5.63% will cost a consumer over $3500 in finance charges!
Of course, those figures don’t include insurance, maintenance and repairs, fuel or taxes. In fact, the average cost an American family will pay for their vehicles over their lifetime is more than $500,000!
Here are some strategies for saving money on your vehicles.
Payments: When people think of how much their vehicle costs, the monthly payment is usually the first item that comes to mind. Lower that cost and you’ll definitely feel the difference.
Refinance: If you have a high interest rate loan, but your credit is good or has improved, you may be able to save money with a lower-rate loan (see the next caveat). Call your current lender to find out if they can refinance your loan, or visit www.CarBuyingTips.com for links to companies that will refinance auto loans, even if your credit is less than perfect. It costs nothing to find out whether you may qualify for a lower rate. Tip: Make sure you get a simple interest loan with no prepayment penalty.
Know The Score: Your credit score likely determines the interest rate you’re paying now on your vehicle loan, as well as the rate you’re paying on your auto insurance. If you’re paying a higher rate for insurance or your loan due to your score, visit www.ConsolidatedCredit.org for free information on how to order your credit report and score, as well as booklets that will tell you how to boost your credit score.
Downsize: Some vehicles are more expensive to own and operate than others – sometimes a lot more expensive. For example, according to Runzheimer International (www.Runzheimer.com) a BMW 540I costs an average of $16,600 a year to own and operate, a Dodge Intrepid will set you back $10,323 a year, and a Honda Civic LX will run you $7475 annually. If auto costs are squeezing your budget, you may want to scale back – at least for one of the family’s vehicles.
Insurance
Not sure how much you’re paying for insurance? Not sure if you’re getting a good deal? You’re not alone. One in three drivers (30 percent) surveyed by the Progressive group of insurance agents didn’t know how much they paid every six months to insure their newly purchased vehicle.
Get A Good Deal: The cost of your insurance coverage can vary by as much as $500 among different insurers, so it pays to shop around. Contact at least three insurance companies for quotes. Ask about discounts if you have an anti-theft device or alarm, get married, or take a driver safety course. Also, check out the rating of the insurance company at www.StandardandPoors.com. You want an insurance company that can afford to pay the bills if you have to file a claim.
Lighten Up On The Lead Foot: Ninety percent of drivers admit to driving over the posted speed limit, and 39% speed more than 25% of the time they’re behind the wheel according to a nationwide survey by the Progressive group of insurance agents.
Does that sound like you? Not only does driving fast expose you to more accidents, your insurance rates may go up by 25% if you are caught and ticketed.
Don’t Leave Yourself Exposed: Auto insurance can be expensive, but going without the right coverage can be financially devastating if you are in an accident. Make sure you understand the types of coverage and have enough insurance if, for example, an uninsured motorist hits your vehicle or you suffer severe injuries requiring expensive medical attention. If raising your total coverage makes your policy more expensive, consider raising your deductibles to offset the cost. Remember, the main reason to have insurance is to take care of losses you can’t afford.
