How to Find Cheap Auto Insurance

Is Cheap Car Insurance Possible?

Auto insurance is one of those irritating expenses of car ownership that has no immediately obvious benefit. We pay and pay, and may never get anything in return. Teenage first car buyers are always a bit startled by the high cost of insurance.

Car insurance is one of the most expensive costs of owning and driving a car, especially for teenagers and other new drivers who can least afford it.

In this article we’ll show you how and where to find the car insurance company for your first car that has the best rates and provides the best service.

We frequently hear the question, “Which auto insurance company is best?” or “Where can I find the cheapest car insurance?” or “What is the cheapest insurance for a 16 year old?” It would be nice if there were a quick simple answer to those questions.

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Fix My Old Car or Buy A New Car?

fix old car or buy newShould I keep my old car and fix it up, or buy a new car?

Expressed another way, the question is this: Is it smarter, more practical, and more economical for me to keep and fix my old car than to buy another car, new or used?

This is always a tough one to answer. Generally, it’s going to be better to fix up an old car than buy a new car every five years or so.

However, the real answer depends on your particular circumstances. Here are some tips that will help you make a decision

How old is your vehicle?

Older, high-mileage vehicles are more likely than newer vehicles to have problems. There are exceptions, of course. Older vehicles also tend to have more serious problems, such as engine and transmission failures, that are expensive to repair.

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What Costs and Fees When Buying a Car?

car costs taxes and feesWhen you buy a car, there’s the actual price of the car of course, but there are always other costs and fees involved.

Some fees are required, some are not. Some are car company fees, some are dealer-added fees and charges. And some are official fees and taxes required by the state, county, or city where you live.

These additional car buying costs and fees can be different depending on whether you buy used or new. Charges can also vary by car company, type of vehicle, dealership, and your location.

Let’s take a closer look.

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What Car Should I Buy?

What Are the Best Cars to Buy?

which car should I buy?There are literally thousands of combinations of different automobile types, makes, models, styles, and prices, which can make it difficult to choose which to buy. However, we will help you determine the perfect car for your needs.

What is a good first car?  Which car is the best buy? Which is more reliable?

Which gets the best gas mileage? Should I buy a SUV or pickup? Which car is safer? Which is more economical?

Which is cheaper to insure?

What car should I buy as my first car?

If you were to ask this question and you gave no other information about yourself or what you wanted, we would suggest you buy either a Honda Accord or Toyota Camry, two of the most popular and most purchased cars in America. Both cars come in either a sporty 2-door coupe version or a 4-door sedan, and with a variety of engines, luxury features, and safety options. Both also offer gas-saving hybrid versions.

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How Does a Car Trade-In Work?

What is the car trade-in process? Do I lose money by trading?

Here is how a car trade works.

Car dealers buy your old car from you and give you credit toward the price of a new car. The trade-in credit is like a down payment and reduces the price of your new car, making your monthly payments smaller.

The dealer then puts your old car on his used-car lot to sell, or he sends it to a dealer car auction where another dealer will buy it to put on his own used-car lot.

Dealers make a lot of profit on selling used cars they’ve taken as trade-in. They pay the trading customer a low wholesale price, and sell the car for a higher retail price. That’s how they make their money and stay in business. Continue reading How Does a Car Trade-In Work?

How to Buy a Car with Bad Credit

buy car with bad creditBuying a car with a low credit score?

Having bad credit means that sometime in your past, possibly as far back as seven or ten years, you have had missed or late loan payments, repossessed property or cars, or have declared bankruptcy. You may also have an excessive number of credit cards with high balances. These factors are included in your credit history reports that come from three credit reporting agencies: Transunion, Experian, and Equifax.

Your entire credit history is summarized in a single number, called your credit score.

Your credit score determines if you’ll get approved for a car loan, how much you’ll in interest, how much down payment you’ll pay, and even how much you’ll pay for auto insurance.

Continue reading How to Buy a Car with Bad Credit

Do I Need A Co-Signer?

Who needs a co-signer for a car loan? How does it work?

need a co-signer for car loanNew or first-time car buyers are often surprised at being turned down for a car loan because they have no credit history, which unfortunately has about the same effect as having bad credit. Getting a co-signer might be the answer.

Lenders want to see that a borrower has a good record with previous loans and credit cards. Without a history of credit, a borrower represents a risk to lenders. If they don’t know a borrower’s history, they take the low road and assume the worst.

It’s a familiar “catch-22″ situation in that you can’t get a loan to establish credit without already having credit. So what is the answer?

What is the answer?

The most common solution is to have someone “co-sign” your loan contract. Typically, it’s family member who has a good credit score. A co-signer plays no part in the loan unless the primary borrower fails to make payments. In that case, the loan company would have the right to seek payment from the co-signer.

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How Car Loan Payments Work

how car loans workAbout principal and interest

If you purchase a new or used car with a loan, you agree to pay off the loan amount (principal) over a specified number of months. But you also agree to pay a finance charge, or interest, for the privilege of using the bank’s (or finance company’s) money for your purchase.

The amount of finance charge that you pay is the interest rate, which is set by the bank or finance company based generally on national lending rates and more specifically on your credit score. Interest rate is expressed as a annual percentage rate (APR), such as 5.5%.

Interest rates can be different for the same loan amount

Wholesale lending rates are lower now than in recent years but banks and finance companies, as well as dealers, can boost these rates (called reserve) for their customers. You can check current national average auto loan rates at Bankrate.com. At the time of this writing, the average 36 month new-car loan rate was 3.93% — very low. But automotive consumers may pay higher rates depending on the lender, dealer reserve, and the customer’s credit score.

Auto buyers should always know their most recent credit score before going car shopping. Otherwise, dealers know more about you than you know about yourself, which could lead to some unpleasant surprises. Getting your credit score is easy enough online. What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com!

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How Is a Car Payment Determined?

How Are Car Payments Calculated?

Car payments are based on how much you borrow, the interest rate, and the length of the loan.

The more you borrow, the higher the payments. The higher the interest rate, the higher the payments. The longer the loan, the lower the payments.

Unfortunately, the formula for calculating monthly car payments is not a simple one and can’t be easily done by hand or by a simple calculator.

It’s necessary to use an electronic business calculator, or by using an online Car Loan Calculator.

Simply plug in the numbers and get your answer.

Continue reading How Is a Car Payment Determined?

Can I Buy a Car if I Am Upside Down on Another Loan?

If you still owe more on your loan than your car is worth, you are upside down.

You may still be able to buy another car if you are upside down on your previous loan.

There are two ways to go about it.

One way to buy with an upside down loan
You could sell your old car but you will have to add extra cash to fully pay off your old loan. You’ll need to pay off your loan so that you can give a clear title to your buyer. However, coming up with extra cash might be a problem, especially if you are upside down by a large amount. For many people, this solution is not possible.

Let’s look at some other ways. Continue reading Can I Buy a Car if I Am Upside Down on Another Loan?

Car Seller Scam – Is This a Car Scam?

Online car buyers exposed to common car scam by criminal sellers

car scamUsers of online car buying sites such as AutoTrader, Craigslist, online newspaper classified auto ads, and other non-dealer car sites often find unbelievable good deals, only to find it was no deal at all, but a common car sales scam.

We often hear the question, “Is this a scam?” from car buyers who have found a “great deal” online. Buyers become suspicious because the price is “too good” and the payment and pickup arrangements seem a little fishy.

Cheap cars advertised on Internet sites can be scams, and it is relatively easy to spot them after the seller has been contacted, but not before. A car-for-sale ad placed by a scammer looks like any other ad — except the price is much lower than normal. They even provide pictures and VIN numbers of real cars (snagged somewhere on the Internet) to make the ads seem more believable. In short, you can’t determine if a car ad is a scam by the information in the ad itself.

Continue reading Car Seller Scam – Is This a Car Scam?

Teen Auto Insurance – Questions and Answers

auto insurance for teensOne of the most bewildering aspects of car ownership for teenagers is that of auto insurance.  It raises questions about why it’s needed, why it costs so much, how it works, and what happens when accidents happen.

We have noticed certain questions come up frequently on online question-and-answer boards used by teen drivers. So we have compiled a “top 10″ list of those questions, with answers, that may help teen drivers better understand car insurance.

1. Q. Why do I need car insurance?

A. Two reasons: 1) It’s the law in most states. In order to drive, you must have at least minimum-coverage liability car insurance to protect others whose lives and vehicles you might damage or destroy in an accident that is your fault — even though you might be a good driver and know that you’ll never have an accident, and  2) To protect yourself and your family against financial disaster should you be sued for an accident you might cause.

2. Q. Why does car insurance cost so much for teen drivers?

A. Simple. Insurance statistics and police reports show that teens have more accidents than any other age group. Therefore, insurance companies are at greater risk of having to pay out claims for teenagers — which means higher rates to help compensate for that risk. The highest rates are paid by teen males driving sporty cars in highly populated areas. Rates can vary by state and city, and by insurance company. That’s why it is so important for teens who need insurance to shop around and get quotes from multiple companies.

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Do I Need a Down Payment on a Car?

How much down payment do I need for my car loan?

how much down payment on car loanUntil relatively recent times, it was standard for car dealers and finance companies to require at least 20% down payment on the purchase of a car. It was for a good reason.

Because cars depreciate in value from the moment they are driven off a dealer’s lot, a down payment helps offset that rapid decrease in value, which may keep the loan from becoming “upside down.”  It also protects the loan company or bank because, if they have to repossess the vehicle, they have a smaller risk of losing money.

Things are different now
Auto manufacturers and dealers are now very competitive and business must be fought for. They are willing to take risks that were unheard of just a few years ago. In many cases, down payment requirements have been reduced or eliminated altogether, primarily for customers with good credit. Continue reading Do I Need a Down Payment on a Car?

Auto Insurance Basics Explained

Understanding the basics of auto insurance

You may go through your entire life and never have a car accident. But the odds are against you. Auto insurance protects you from potentially disasterous costs of such accidents. If you are buying your first car, you must understand how car insurance works and why you need it.

Laws in most states require that drivers have at least a minimum level of liability insurance – repeat, liability insurance – not collision or comprehensive, although lenders and lease companies may require full coverage, including liability, collision, and comprehensive.

Types of insurance
An auto insurance policy might include one or more of the following types of coverage: Continue reading Auto Insurance Basics Explained

Lease or Buy – Which is Better?

Lease vs Buy? What’s the Difference?

One of the best ways to decide between car leasing and buying with a loan is to directly compare the attributes of each, which we will show you in this article. We’ll tell you about how payments compare, about how fees are different, about advantages, and disadvantages.

Another way to help make a decision between leasing and buying is to compare the cost of each for a specific lease vs. buy situation. For this, you’ll need a special Lease vs. Buy Calculator.

Now, let’s take a look at how car leasing compares with buying with a loan. Continue reading Lease or Buy – Which is Better?

For First Car Buyers and Other Car Buyers