3 Things You Must Do Before You Lease a Car

Three Things You Must Do Before You Lease a Car

I tend to drive my cars until they die, and a couple of years ago that’s what happened. In need of a new car, but not sure what I wanted for the long-term, I considered leasing a vehicle. But if buying and financing a car seemed confusing, leasing seemed even more overwhelming. I ended up buying instead.

Turns out, though, that while leasing isn’t for everyone, it can have some advantages. Lower monthly payments and more flexible credit score requirements may be two of them.

If you are thinking about leasing, here are three things you can do to help improve your chances of getting approved.

1. Check Your Credit

Your credit score plays a key role in the lease you get. “There are going to be different tiers of credit that will be evaluated,” said Scot Hall, Executive Vice President of WantALease.com, an online marketplace for new lease deals. “If you have better credit, you will get better rates unless it’s a dealer-subsidized lease.”

Checking your credit reports at least a month before you plan to start shopping is ideal, since that will give you time to dispute and fix mistakes. While you are at it, check your free credit scores as well (you can access two of your scores free on Credit.com). You will get an idea of where you stand and whether there are potential issues with your credit.

What kind of credit scores are required to qualify for a lease? “(If) you do have good credit it really unlocks the door to the best lease deals. You’ll be able to take advantage of some of the lease specials,” said Edmunds.com Consumer Advice Editor Ron Montoya.

In addition, it may be easier to qualify for a lease than a loan on certain vehicles, at least when it comes to your credit scores. The make and model of the vehicle you choose will also affect your options. Experian Automotive found, for example, that the average credit score of someone who took out a loan for a new Jetta in the fourth quarter of 2014 was 716, while the average credit score for someone leasing one was 692. But for someone driving a new Grand Cherokee, the average credit score for a loan borrower was 735, while the average credit score for a lessee was 728.

average credit score

2. Know Your Cash Flow

One of the distinct advantages of leasing is that it may allow you to pay less per month than if you financed the same vehicle. According to Experian Automotive, the average monthly payment for a new lease was $420 in the fourth quarter of 2013, and the majority of leases (66%) were for a 24- to 36-month term.

But your lease payments may be lower than a loan payment for a similar vehicle. For example, the average lease payment for a Jetta was $287 while the average loan payment was $389. And for a Grand Cherokee, the loan payment averaged $611, compared to $470 for the lease payment.

average payment

Keep in mind that these monthly payments don’t take down payment or trade-in into account. And if you lease, you’ll either have to turn in the vehicle or purchase it when the lease term is up. “Consumers need to fully understand any potential cost on the back-end and be sure they can meet the terms of the lease – such as mileage limits and wear and tear,” said Melinda Zabritski, senior director of automotive credit for Experian Automotive.

3. Don’t Just Shop for a Car, Shop for a Lease

Unlike auto loans (which are available from a variety of sources including banks, credit unions, dealers and even online), leases today are largely controlled by the manufacturer. “Nearly all leases are done on a captive basis,” said Hall. For example, “Ford Motor Credit Company does most of the leases for Ford vehicles.”

That means you may be able to get a better deal if you are flexible and willing to consider a vehicle from a different manufacturer.

In addition to credit, the company offering the financing looks at your debt-to-income ratio and the “lease-to-value” ratio – in other words, how much you are financing compared to the value of the vehicle, said Hall. If you are having trouble qualifying, you may need to put additional money down or get a co-signer, he adds.

The good news is most people who apply for a lease qualify for one. Lease approval rates during the month of January were above 70%, according to SwapALease.com. Though that’s down from 73% in December of 2013, it’s up from September 2013 when a little more than 62% of applications were approved.

And there’s still another option: If you’re not ready to commit to a two- or three-year lease, you can consider taking over the remaining term on someone else’s lease. As long as your credit is in the same “tier” or better than the person whose lease you are assuming, you shouldn’t have much trouble qualifying, says Hall. Sites like SwapALease.com and LeaseTrader.com help bring together consumers who want to get out of leases and those who want to assume one and allow you to try out leasing without a longer-term commitment.

Image: Len44ik

This article has been updated. It originally ran on March 20, 2014.

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6 Reasons to Leave Your Car Insurance Company

Here are six signs it's time to break up with your auto insurance company.

You might be familiar with a few scenarios that could make your auto insurance rates change: You bought a new car, moved, got in a car accident, or even got married or graduated from school. In all these cases, it’s important to shop around for car insurance to ensure you’re getting adequate coverage — at the right rate — to meet your needs.

Even if you’re happy with your car insurance company, simply checking out the competition on a regular basis (we recommend every six months) can help keep your current rate low because it indicates to your insurance company that you’re on the lookout for better deals, and your insurer will, therefore, be motivated to keep you.

Insurance rates and policy details vary widely by insurer and by person. If you get a quote from a dozen insurance companies, many of the quotes might look quite similar, while others might show your premium varying by hundreds of dollars.

Even if your rates and coverage were equal among a handful of insurance companies, we remind you: It’s not all about price.

Insurance is intended to protect you when you need it — legally, medically, financially. You want to make sure you choose the company and service that meets your needs and has your back. If you’re not getting that support, you might consider changing insurance companies.

The Zebra’s licensed insurance agent and adviser Neil Richardson offers his expert advice on when it’s time to leave your insurance company:

1. Your Rates Increase (And It’s Not Your Fault)

As we’ve discussed, countless factors impact your auto insurance rates, including where you live, what kind of car you drive, your driving record and insurance history, and your personal information such as age, gender, marital status, credit score and more in many states. (You can view two of your credit scores for free on Credit.com.)

When any of these factors change, your rates may change, too. Sometimes it’s for the better (the older you get, the lower your rates drop — until about age 60, that is), and sometimes for the worse (if you cause a collision, your rates could rise nearly 50%!). Long story short: It shouldn’t be a huge surprise.

Because auto insurance companies are businesses that must make money to stay afloat, they may raise premiums for their customers, likely following a high claims payout period in which they incurred hefty losses. You may or may not be able to find lower rates elsewhere (for example, if a violent storm caused damage in a certain geographical area, other insurance companies could be suffering the same losses from big claims payouts), but it’s worth shopping around.

2. Your Insurance Agent Is Inflexible About Your Policy

A big part of the insurance company choice comes down to customer service, and if you aren’t getting the results you expect, within reason, you might consider other options. You should expect a certain degree of flexibility from your insurance company, and if you speak with someone who isn’t flexible with your insurance requests, keep in mind that there are plenty of companies that would like to try to keep your business.

“Changes like updating coverage or adding or removing a vehicle are simple requests, so if you hit a roadblock with an agent, it can be a sign that you need a new insurer,” said Richardson.

You should have full access to your policy and the ability to make adjustments, even mid-cycle, so if you’re told it’s not an option, begin shopping around.

It’s also important to note that you should be realistic about rates. Every time you make an adjustment to your policy, whether you’re adding or removing drivers or vehicles, your rate will change. So, if your rate goes up a little in one of these instances, it likely doesn’t mean you’re being treated unfairly. Here are some things that may impact your car insurance.

And/Or a Member of the Company Is Rude to You

It goes without saying that if any member of the customer service team or an agent is rude to you, you should consider taking your business elsewhere.

“There are just too many insurance options out there for you to stick with a company that doesn’t value your business,” Richardson said.

There are certain issues outside a representative’s control, but you can always ask to speak with a supervisor to voice your concerns. And if you end up switching companies because of a customer-service issue that isn’t resolved to your satisfaction, mention the incident to your new insurer to avoid going through the same headache.

3. You Notice Changes to Your Monthly Bill That You Weren’t Informed About

If you’re billed monthly for your policy, the price should be consistent each billing cycle.

If you notice a change in your bill for which you were not contacted, it can be a sign that something’s amiss with your insurer.

“Sometimes policy updates get sent to your email spam, and sometimes phone calls or mailings are missed, but if you notice a change in your rate, you should look into it immediately,” said Richardson.

If you don’t feel you were adequately informed, shop around for a new company that meets your customer-service needs.

4. You Want 24/7 Agent Access

Many local insurance agencies aren’t available to customers at night or on the weekends, and while often this works just fine, if you’re the type of person who needs more access, you might consider a switch.

For instance: If you buy or lease a new car on a weekend and your insurer doesn’t have weekend availability, you might not be able to take your car home right away. Many dealers require proof of insurance (especially if you’re leasing or financing) before they allow customers to drive off the lot.

Plenty of big national insurance companies have 24/7 agent access, which can be a plus if you’re the type of person (or family) who regularly changes vehicles. Keep in mind, your local agent might be willing to make an off-hours exception for your insurance needs if you give them advance notice.

5. You Want to Conduct Insurance Business Online

Some of us are more comfortable conducting business online, and that’s OK. If you want to add or remove drivers or vehicles without speaking to someone on the phone, you’ll need an insurer who can meet your needs.

Insurers offering online access tend to be larger national brands, but every company is different, so check out all the options in your area. Most insurers spend a lot of money to allow customers online access, so if you want to know about an insurer’s online policies, just ask, and they’ll usually be happy to help you navigate.

If online access is important to you, remember that it’s just one piece of the insurance puzzle. You should always consider the importance of adequate coverage, as well as service and rates.

6. You Want to Add Drivers to Your Policy

When you have a new spouse, a newly licensed teen driver or a new roommate, you might consider adding them to your own auto insurance policy. Adding extra coverage or drivers to your policy often shifts both your needs and the discounts you qualify for enough that you might find you fit better — and save money — with another company.

Life changes — big or small — could put you in a new risk category, which might mean you’re a better fit with a different insurance company,” Richardson said. “There’s not an advertised rate for life-event changes, so you’ll need to shop around to see if you can get better coverage prices and discounts from other companies.”

If you’ve been with a company for a while, particularly a local one you know, the idea of changing companies might feel uncomfortable and make you feel a little guilty. But when it comes to insurance, you need to do what’s best for you.

Image: Mixmike

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The 14 Longest-Running Vehicles on the Road

These cars are the most likely to keep running up to 200,000 miles and beyond.

Image: Tomwang112 

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The 20 Worst States for Filing an Auto Insurance Claim

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Image: RuslanDashinsky

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Are Fast Cars More Expensive to Insure?

Are fast cars more expensive to insure? Not quite, and here's why.

Even just a decade ago, cars weren’t nearly as fast as they are today. In fact, 300 horsepower was expected only from V-8 engines, writes Forbes. But because of “direct fuel injection, turbocharging and other advances in engine technology and design, power and speed can be bought in a range of body styles, vehicle sizes and powertrain configurations.”

Speed — as measured by quickness of acceleration and pure engine power, and not top speed, which only matters on race tracks — is now more accessible than ever, and as Tesla just proved, as cars move to electric power, we might see faster and faster cars on the road. Tesla’s Model S is now the third fastest car in the world, writes The Verge (behind just the Ferrari LaFerrari and the Porsche 918 Spyder — both million-dollar hypercars). Upgrades to the battery allow the Model S to go from 0 to 60 mph in 2.5 seconds, making us wonder: Do the fastest cars cost more to insure?

We looked at cars people might actually drive (we’ll save concept cars and supercars for another list and another day) and calculated insurance premiums based on a standard profile: a 30-year-old single man living in Austin, Texas (ZIP: 78702), who rents his home, owns his car, has a good driving history, a good credit score, and has had consistent insurance coverage for a basic level of insurance with a national carrier. (You can view two of your credit scores, with helpful updates every two weeks, for free on Credit.com.)

Keep in mind, the time it takes for a car to accelerate from 0 to 60 mph can vary widely based on each driver’s skill, so results may vary. In no particular order (because their specs and model years differ), here are 10 of the fastest cars on the road and their stats.

1. 2017 Chevrolet Camaro
MSRP: $37,900
Engine Details: 6.2-liter V8, 455 horsepower
Acceleration Speed: 0-60 in 4.0 seconds
Average Yearly Insurance Premium for a Chevy Camaro: $1,620

2. 2016 Jaguar XJR
MSRP: $118,000
Engine Details: 5.0 Liter V8 550 HP Supercharged
Acceleration Speed: 0-60 in 4.4 seconds
Average Insurance Premium: $2,148

3. 2017 Cadillac CTS-V
MSRP: $85,995
Engine Details: 6.2-liter V, 640 horsepower
Acceleration Speed: 0-60, 3.7 seconds
Average Yearly Insurance Premium: $2,112

4. 2016 BMW M5
MSRP: $94,100
Engine Details: 4.4-liter V8 TwinPower Turbo, 560 horsepower
Acceleration Speed: 0-60 in 4.2 seconds
Average Yearly Insurance Premium: $2,112

5. 2016 Dodge Charger SRT Hellcat
MSRP: $67,645
Engine Details: 6.2-liter supercharged Hemi V8, 707 horsepower
Acceleration Speed: 0-60 in 3.7 seconds
Average Yearly Insurance Premium: $1,512

6. 2017 Audi RS 7
Engine Details: 4.0-liter V8 with two turbochargers, 560 horsepower
MSRP: $110,700
Acceleration Speed: 0-60 in 3.7 seconds
Average Yearly Insurance Premium: $2,268

7. 2017 Volkswagen Golf R
MSRP: $39,375
Engine Details: 4-cylinder turbo, 292 horsepower
Acceleration Speed: 0-60 in 4.5 seconds
Average Yearly Insurance Premium: $1,560

8. 2017 Ford Mustang GT Fastback
MSRP: $33,195
Engine Details: 5.0-liter V8, 435 horsepower
Acceleration Speed: 0-60 in the mid-4 second range
Average Yearly Insurance Premium: $1,512

9. 2016 Dodge Challenger R/T Scat Pack
MSRP: $39,995
Engine Details: 6.4-liter V8, 485 horsepower
Acceleration Speed: 0-60 in the low-4 second range
Average Yearly Insurance Premium: $1,608

10) 2017 Volvo S60 Polestar
MSRP: $60,000
Engine Details: 3.0-liter Turbocharged inline 6-cylinder 345 horsepower
Acceleration Speed: 0-60 in 4.7 seconds
Average Yearly Insurance Premium: $1,428

Compare these insurance prices with the prices of the five most popular sedans for 2017, based on our new State of Auto Insurance Report, for the same insurance customer profile.

Chevrolet Cruze
MSRP: $16,975
Acceleration Speed: 0-60 in 7.6 seconds
Average Yearly Insurance Premium: $1,056

Honda Accord
MSRP: $22,455
Acceleration Speed: 0-60 in 6.1 seconds
Average Yearly Insurance Premium: $1,176

Hyundai Elantra SE
MSRP: $17,150
Acceleration Speed: 0-60 in 8 seconds
Average Yearly Insurance Premium: $1,344

Nissan Altima
MSRP: $22,500
Acceleration Speed: 0-60 in 7.7 seconds
Average Yearly Insurance Premium: $1,260

Toyota Camry
MSRP: $23,070
Acceleration Speed: 0-60 in 8 seconds
Average Yearly Insurance Premium: $1,236

Final Word: Do Fast Cars Cost More to Insure?

Our assessment: We can’t say for sure whether or not all cars with more powerful engines that can accelerate faster always cost more to insure than their slower counterparts, but all of the faster cars above come with more expensive insurance premiums than all of the slower cars we looked at.

Another potential insurance price factor: All of the faster cars also cost more (in some cases, a lot more) than all of the slower cars. We know that price has something – though not everything – to do with insurance pricing (which is still somewhat of a mystery, even to us).

As we’ve seen, equating insurance rates with one definable feature is tough: Insurance rates weren’t strictly correlated with safety rating, either. But while we might not be able to say with absolute certainty that faster cars will mean more on your monthly premium, we do have proof that using that speed illegally is practically guaranteed to cost you.

The Insurance Consequences of Speeding Convictions

If you drive a certifiably fast car, always remember to follow the rules of the road, not only because it’s safer for you and everyone driving near you, but because beyond any traffic citations you might receive for speeding, speeding also has some pretty detrimental effects on insurance rates.

In 2016, if you were convicted of speeding, your insurance rates went up by the following percentages (national U.S. averages from The Zebra’s State of Auto Insurance Report):

  • Speeding in a School Zone: 18%
  • Speeding 6-10 MPH over the limit: 17%
  • Speeding 11-15 MPH over the limit: 18%
  • Speeding 16-20 MPH over the limit: 19%
  • Speeding 21-25 MPH over the limit: 20%
  • Speeding In 65 MPH Zone: 23%

That means if we’re looking at the national average premium of $1,323, a single speeding ticket could raise your rates from $225 to $304. (And that continues for three years after the violation occurs.)

Fast cars with great handling make for excellent driving – but stay safe (and under the speed limit!) – or you could pay in more ways than one.

Image: mevans

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The Fed Just Teased a Rate Hike. Will Savings Rates Finally Improve?

If you want to make the most of rising interest rates, here's your game plan.

Interest rates are likely going up again, and soon, Federal Reserve Chair Janet Yellen told Congress Tuesday, sending up a clear flare for anyone paying attention.

“Waiting too long … would be unwise,” she said. This, after the Fed telegraphed in December that 2017 might bring three separate rate hikes.

That’s bad news for all kinds of borrowers because interest rates on many different credit vehicles will likely follow suit. It should be good news for savers with money in old-fashioned deposit accounts and those who like certificates of deposit (explained here), and money market account holders for the very same reason. But that remains to be seen.

When the Fed raised its key funds rate in December — for only the second time in 10 years— that triggered increases across the entire financial world. Auto loan rates went up. Mortgage rates went up. Credit card rates went up. So why didn’t savings rates follow suit?

Well, they did. A little. A very little.

The average savings account annual percentage rate increased from 0.180% in January to 0.181% in February. That’s up from 0.179% in December of last year, according to DepositAccounts.com. So, in two months, that’s an extra two pennies per year per $1,000 saved. Don’t spend it all in one place!

“The banks are being very cautious,” said Ken Tumin, DepositAccounts.com founder. “There has been no mass movement in deposit rates.”

Keep in mind, mortgage rates are — predictably— up about half a percent during the past year, according to Freddie Mac. So are auto loans, according to the Federal Reserve. So what gives? Why are consumers seemingly being punished on both sides of the equation?

Well, there’s plenty of speculation as to why. Recall the basic concept that banks accept deposits — and give depositors interest— so they can lend that money out at a higher rate to borrowers, and profit from the difference.

One possible reason is something known as “asynchronous price adjustment.” It’s the same phenomenon often observed when there are price shocks in the oil market. Gas prices go up quickly, but drop slowly when oil returns to its normal price. There are many mechanical market reasons for this, but suffice to say that corporations adjust more quickly than consumers to price movements, so they are good at making a little extra cash when big turnarounds take place. So, like gas prices, savings rates will bend pro-consumer eventually, but not before banks enjoy a bit of time with the extra “spread” between the savings rate they pay and the interest rates they charge.

Skepticism Remains About Rate Increases

A more direct reason, Tumin said, is that banks are still unconvinced that rates are going up more. Back in 2015, the Fed raised rates once and indicated that 2016 might include a series of hikes. Those never materialized, as questions about a sluggish economic recovery remained. So banks might be scared of a similar head fake this year, Tumin said. No bank wants to lead the pack with higher savings rates.

Also, like any business, banks only pay more for raw materials (money, in this case) when they have to— because of competition, or because they need cash because the lending business is going great guns.

“Rates are determined by banks needing to raise capital, to improve what’s called their loan-to-deposit ratio,” Tumin said. That’s not happening at the moment.

It wasn’t always this way. As recently as the housing bubble years, high-yield, Internet-based savings accounts paid 3-4%, and CD rates persisted into the 5% range. Today, the very best passbook rates hover around 1%, and CDs aren’t much better, though some banks offer teaser (temporary) rates that are a smidgen higher.

You Still Have Options … Though Not Great Ones

Consumers sitting on cash with a very low risk tolerance do have some options, though none of them are great. Tumin says savers should keep their eyes on CD rates: When banks have short-term needs to raise capital, they are more likely to temporarily offer higher CD rates. That’s because it’s much easier to lower CD rates after the capital is raised than to lower passbook savings rates.

One-year CD rates had the largest increase last month, DepositAccounts says, with the average annual percentage yield (APY) increasing from 0.496% in January to 0.505% in February. The average 1-year CD rate among the top 10% of the most competitive banks nationwide increased from 0.880% to 0.910%.

CD rates can fluctuate quickly. Capital One 360’s 60-month rates have vacillated between 1 and 2% during the past year, for example. (They sit at 2% right now).

CDs come with a big “but,” however.

“In a rising rate environment … no one wants to get stuck in a CD,” he said. A 2% rate that looks good today might look bad 18 months from now, when it’s possible the Fed will have raised its rate five or six times.

Recall that CDs require time commitments, and often have hefty penalties for early withdrawal. Consumers considering this route should carefully weigh the withdrawal penalties (Some are less onerous— 6 months’ interest, for example— which might make them a decent risk).

Of course, savers frustrated by low yields can consider more risky, non-guaranteed investments in the stock market. But who can blame a saver for thinking the market, and the economy, seems a bit volatile right now?

Your Best Bet? Pay Down Debt

The best course of action is to pay down debt, which is very nearly the same thing as earning interest on your money. Pay your highest APR credit card debt, of course. But making a few extra payments on a car loan or, better, a mortgage, is a good way to earn a “return” on cash that’s otherwise sitting idle.

Keeping your credit in good shape is also helpful. A good credit score can help you get the best terms and rates available. If you don’t know where your credit stands, you can check your two free credit scores, updated every 14 days, right here on Credit.com. You’ll also get personalized details about ways you can improve your credit scores in five key areas. (If you’re not sure where to start, you can check out these tips for how to quickly improve your credit score.)

Meanwhile, pay attention to what the Fed says in the coming weeks and months. Tumin is pretty sure Yellen isn’t crying wolf this time.

“A March increase is still on the table,” he said. “Most analysts think the Fed will probably skip March, and that the next (increase) comes in June. Unless the economy turns around and goes down I don’t think there will be a repeat of last year with only one hike. There should be at least two, and if savers are lucky maybe three.”

They’ll be lucky if banks pass along the higher rates to both mortgage borrowers and savers. Meanwhile, you can take luck out of the equation by continuing to watch published rates and consider switching to a bank when it raises rates. After all, someone’s got to be first.

Image: xesai

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A Quick Guide to How Much Car You Can Really Afford

how-much-car

If you’re planning a car purchase, and even if you’re in the middle of financing your car, a few tips from financial experts can help you save money (and hopefully guard against becoming “underwater” on your loan).

Paying off a car is, of course, a highly individual process dependent on many different personal factors like credit score (you can view two of your credit scores, updated every 14 days, for free on Credit.com), financing rate, down payment, and how much you can afford to pay each month.

When budgeting, it’s also critical to consider expenses such as your auto insurance premium, gas, and maintenance into the total cost of ownership of your vehicle.

Still, there are some general guidelines that most people can follow:

  • Financing: Experts The Zebra spoke to said they recommend auto loans not exceed 10% (for just the loan) to 20% (for the loan plus related expenses like gas and insurance) of a consumer’s gross monthly income.
  • Timeline: You should take the shortest term you can afford for two reasons: Shorter terms come with lower interest rates and they allow vehicle equity to build faster, Bob Harwood, vice president of Carloan.com in Richmond, Virginia, said. Experts cited four or five years as the ideal balance of affordable monthly payments and reasonable total interest. If you have to spread your payments out over six years (72 months) or more to get monthly payments you can afford, you might want to consider a less expensive car.

“Your goal as a consumer is to decide what works best for your monthly budget so you can decrease the long-term expense,” banker Deric Poldberg from American National Bank in Omaha, Nebraska, said.

Hypothetical Financing

The Zebra asked three financial experts from around the country for their input about what type of loan over what time period a person living in Texas making $50,000 a year (the average statewide income) should expect to pay for a 2016 Honda CR-V LX (one of the most popular cars in the U.S.) for $23,000 (a little below the MSRP).

The Verdict(s): You’ll pay between $400 and $500 per month, depending on your credit and how quickly you can/wish to pay the vehicle back. Here are three ways of getting there:

  • Per Poldberg: “For this customer, the interest rate is going to be between 4.79% – 5.49% based on the U.S. average credit score (687). Because most people finance their vehicles for five years, that would lock our customer into a rate of 4.99% for 60 months, making the monthly payment $433.93. During the term of the loan the customer would end up paying an extra $3,035.97 in interest, bringing the total out-of-pocket expense to $26,035.97. Financing your vehicle for the least amount of time possible will save hundreds or even thousands of dollars in the long run, but often people just want a lower monthly payment and disregard the long-term cost of the loan. If you financed that same CR-V for the maximum 75-month term, you’d end up paying $3,820.11 in interest (quite a bit more). But most consumers just look at the low monthly payment of $357.60 and think it’s a better deal.
  • Per Rob Jupille, president of RTJ Financial in Santa Monica, California: “Assuming a relatively ‘normal’ level of other debt, when doing a budget, generally target your auto loan to be in the neighborhood of 10% of gross pay (excluding other auto-related costs like gas, maintenance, insurance, etc.) and put at least 20% down to reduce the likelihood of being ‘upside down’ on your loan. This way, you’d look for a monthly car payment not exceeding $400 and we’d recommend shopping for a combination of interest rate and term to stay within that number.”
  • Per Harwood: “Considering that your monthly car expense (including insurance, gas, etc.) should be no more than 20% of your take home pay, we can assume that an annual income of $50,000 translates to about $3,300 in take-home pay monthly after taxes. Budgeting around $250 for secondary auto expenses leaves room for a payment of around $450. For a consumer with decent credit, the $23,000 financed over 60 months at an interest rate of 6.9% lands the payment at $454 per month. (Of course, everyone should pay off their car loan as quickly as they can, but this is a realistically affordable scenario.)”

The bottom line: For a smart financing deal, pay the most you can for the shortest amount of time and after you’ve paid off your car loan, keep saving for your next car – or for a “rainy day.”

Image: Squaredpixels

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27 Data-Based Tips for Saving on Car Insurance

tips-for-saving-on-car-insurance

The complexities of car insurance pricing, made even more complex by varying state coverage requirements, can make finding the right policy for you an incredibly frustrating ordeal for countless consumers. Oh yeah, and coverage can be pretty expensive.

As a licensed insurance agent, I know a few more tricks than the average consumer to help lower that auto insurance premium. So, in an attempt to help bring transparency to the world of car insurance, here are some data-verified savings tips, culled from The Zebra’s State of Auto Insurance Report.

1. Avoid Letting Your Insurance Coverage Lapse

Even after being insured for just one year, rates drop 7.7%. The discount for maintaining continuous insurance offered by most companies is also affected by the amount of liability coverage on your policy. The higher your limit of liability, the better your prior insurance discount will be.

2. Consider Bundling

Bundle your auto policy with homeowner’s insurance and you could save an average of $110 per year or bundle renter’s with auto to possibly save $72 per year.

3. Do Some Research

Take a few minutes to learn about which companies, minimum coverage requirements and other factors apply to your state.

4. Get Ahead of the Game

Purchase your policy at least 10 days before you need it activated for a better rate. This is especially helpful if you know your policy is coming up for renewal and you want to switch to a new company.

5. Pay in Full Up Front for Your Policy

Drivers save an average of $62 per year by paying in full rather than an installment plan.

6. Shop When You Move

If moving to a new state — or even a new ZIP code — make sure to shop for a new policy. The most expensive state for insurance (Michigan) is almost three times as expensive as the least (Ohio), so you could be in for huge savings depending on the state you’re leaving (or increases, so make sure you’re informed).

7. Boost Your Credit

Drivers who increase their credit score by one tier save an average of 17% off their annual premium. (You can see two of your credit scores for free, updated every 14 days, on Credit.com to find out where you stand.)

8. Buy an Older Car

A 5-year-old version of a certain model is nearly 13% less expensive to insure than its current model year version.

9. Provide Your VIN When Getting Quotes 

Most new vehicles come with factory alarms so giving your VIN might help you qualify for an anti-theft device discount.

10. Drive Safely

While this is a good idea for your own well-being and that of others around you, of course, you’ll also save yourself from a potential rate increase.

11. Remember: Not All Car Insurance Companies Are Created Equal

They have unique business models designed to serve certain types of drivers who pose different levels of risk. Make sure to find the right fit for your needs and behaviors.

12. Don’t Stop Looking

It’s a good idea to shop around every six months to see if a new insurance company or policy fits you better and compare car insurance quotes to make sure you’re considering all rating factors and companies applicable to your unique needs.

13. Go Paperless

Agreeing to go paperless and signing your policy documents electronically can lead to discounts with some providers, so consider opting in and providing your email address when buying a new policy.

14. Tout Your Education

Listing your highest level of education can lead to a lower rate because many companies use it as a rating factor and may even offer discounts for college grads. Check the answer to that question on your policy; you could be leaving money on the table.

15. Consider Usage-Based Insurance

If you live close to work and are a safe, low-mileage driver, you may want to consider adding a telematics device in your vehicle to share your driving behavior with your insurance company. Having this device on your car may be able to save you up to 30% on your coverage, based on your driving habits and other regulations.

16. Study Up On Insurance Lingo 

Spend some time researching and reading to help you understand what you’re buying and make sure it actually fits your needs. There is no one-size-fits-all car insurance policy.

17. Make it Automatic

Consider signing up for auto pay or electronic funds transfer (EFT) instead of receiving a bill. Many providers offer a discount for doing this, which can certainly add up over time.

18. Venture Out on Your Own

Have you been listed as a driver on someone else’s policy for at least six months? Most insurance companies will offer a discount on your own separate policy.

19. Share More Than Your Space

Do you share a residence with another driver? Consider combining policies to share the cost of your insurance for more savings.

20. Bump Up Your Deductible

Increasing your deductible from $500 to $1,000 could save you about $150 per year.

21. Budget for Auto Insurance

Always consider auto insurance as a significant portion of the total cost of ownership of your vehicle. In fact, in many cases, insurance can be the largest car-related expense after the car itself, so make sure you factor insurance into your budget and can afford your coverage.

22. Celebrate Your Age

Everyone knows that some birthdays are more monumental than others and it seems like car insurance companies feel the same. We found that drivers can see significantly lower rates after their 19th, 21st, and 25th birthdays, so consider shopping around at those times. It’s also important to note that, on the whole, rates drop each year drivers age until they turn 60 when rates typically level out.

23. Avoid Getting Left Out in the Rain

It’s a good idea to add coverage to your policy at least a week before a large storm hits your area (if you know it’s coming) to help you avoid being stuck paying for the damage yourself. Insurance companies may set binding restrictions that prohibit agents from selling policies for comprehensive and/or collision coverage as a storm nears — though you will still be able to get liability coverage (as it’s required by every state).

24. Be Aware of Local Traffic Laws

Tickets and violations can affect your insurance rate for three years from the date of the ticket. Accidents can affect your rates for up to five years from the date of the accident. In California, DUIs can hurt your rate for up to 10 years from the date of the incident.

25. Factor in More Than Just Price

It isn’t just about how much you’re paying. Getting the right coverage from a reliable insurance company can help keep you from paying big in the event of a collision or other incident.

26. Be Honest & Detailed

Insurance companies will run background checks on your driving record, address and (sometimes) your credit to price your rate, and any guessing could mean your quote and final premium differ substantially.

27. Baby Your Car

Filing an expensive claim not only costs you your deductible, it is one of the most surefire ways to raise your rates for several years to come. If possible, park your car in a garage to help keep it protected from potential damage caused by hail, windblown sand or debris, and other harmful objects. (You can find more ways to save on car insurance here.)

Image: Solovyova

The post 27 Data-Based Tips for Saving on Car Insurance appeared first on Credit.com.

12 Ultimate Rides for Tailgate Parties

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Photo: Steve Debenport

The post 12 Ultimate Rides for Tailgate Parties appeared first on Credit.com.

12 Cars That Depreciate Quickly (& Are Good to Buy Used)

cars-that-depreciate-quickly

If you’re in the market for a new car, you may be tempted to drive a brand-new one off the lot. After all, many manufacturers are already releasing their feature-packed 2017 models, and the weather hasn’t even turned cold yet.

But, before you do, consider this: A new study by iSeeCars.com, an automotive data and research company, found that buying a new car is not always going to get you the best bang for your buck. In fact, the company discovered that purchasing some cars that are just a year old can provide consumers with substantial savings.

“Most people know new cars depreciate the most in the first year and that different cars have different depreciation rates, but we wanted to determine which used cars experienced the largest price drops compared to their new models,” Phong Ly, the CEO of iSeeCars.com, said in a press release.

To establish the savings, iSeeCars.com analyzed the more than 14 million cars sold from August 1, 2015 and July 31, 2016, excluding models with fewer than 250 new and 250 used cars sold. The average asking prices of year-old cars were compared to those of new cars from the same model, according to the release, with the difference in price expressed as a percentage of the new model average price. This percentage was then compared to the overall percentage difference across all models.

Using this data, iSeeCars.com researchers found that the average price difference between a new car and a lightly used car was 21.2%, ranging from $6,099 to $19,966 in savings. (Note: For this study, a lightly used car is defined as a vehicle from the 2014-2015 model years with mileage within 20% of 13,476, the average annual miles traveled in the U.S., according to the Department of Transportation.)

But it isn’t all cars — iSeeCars.com established a dozen cars that offer the best value when purchased lightly used instead of brand new, with price differences between 31.2% and 34.6% — at least 1.5 times more than the overall average. Below are those 12 cars.

1. FIAT 500L

Price Difference: $8,096 less
Percentage Price Difference: -34.6%

2. Lincoln MKS

Price Difference: $16,039 less
Percentage Price Difference: -34.5%

3. Volvo S60

Price Difference: $14,204 less
Percentage Price Difference: -34.4%

4. Kia Cadenza

Price Difference: $12,940 less
Percentage Price Difference: -34.3%

5. Mercedes C250

Price Difference: $15,247 less
Percentage Price Difference: -34.3%

6. Nissan Maxima

Price Difference: $12,469 less
Percentage Price Difference: -34.0%

7. Lincoln MKS + MKZ Hybrid

Price Difference: $14,177 less
Percentage Price Difference: -33.8%

8. Jaguar XF

Price Difference: $19,966 less
Percentage Price Difference: -32.3%

9. FIAT 500

Price Difference: $11,106 less
Percentage Price Difference: -31.9%

10. Cadillac ATS

Price Difference: $6,099 less
Percentage Price Difference: -31.8%

11. Chrysler 300

Price Difference: $13,351 less
Percentage Price: -31.7%

12. Buick Regal

Price Difference: $11,525 less
Percentage Price Difference: -31.2%

If you’re considering purchasing a new car — whether it’s straight from the manufacturer or simply new to you — it’s a good idea to make checking your credit part of your shopping process. Knowing where your credit stands can help you get an idea of what terms and conditions you may qualify for with your auto loan. You can see two of your credit scores for free, updated every 14 days, on Credit.com.

Image: AdrianHancu

The post 12 Cars That Depreciate Quickly (& Are Good to Buy Used) appeared first on Credit.com.