DrivingBus.com/blog is an automotive blog contains numerous topics with latest information about auto accessories, motorcycles, auto system, legal, financing & insurance, auto supplies, transportation, driving school, rentals, buy & sell, travel.

Archive for the ‘Financing & Insurance’ Category

Myths About Car Insurance

Monday, July 20th, 2015

There is a lot of misinformation about car insurance floating around. Here we bust five common car insurance myths.

Myth #1: Where You Live Has No Impact on Coverage

Unfortunately, this is false. While where you live may not necessarily be your choice, it does have an impact on your car insurance. People who live in rural areas are likely to pay less than those who live in the city, as city dwellers are at a higher risk for claims due to more people and increased likelihood of theft.

Myth #2: Older Drivers Have Higher Rates

For the most part, this is not true. The thing to keep in mind when it comes to car insurance is that every driver is different. Although rates for drivers older than the age of 25 are generally lower, that is entirely dependent upon driving history. For example, if a 55-year-old driver receives numerous moving violations over the course of several years then that driver may find their rates increase over time, as opposed to decreasing with each passing year.

Myth #3: You’re Covered if Your Car is Stolen, Vandalized, Damaged by Hail, Wind, Fire or Flood

Unfortunately, this is also false. What most people don’t realize is that basic coverage isn’t comprehensive. As a result, if your car is stolen, vandalized, or damaged by the elements, you may be held responsible for out-of-pocket repair expenses for your vehicle. However, if you’re leasing a vehicle, you may already be paying for comprehensive and collision coverage, as it is often a condition of leasing.

Myth #4: Your Credit Has No Impact on Your Rate

This is absolutely false. Your credit does impact your car insurance rate, but only in relation to your credit-based insurance score. This credit-based score, which is basically a snapshot of how you manage your financial affairs, gives insurers key insight into how much of a risk you are. Bear in mind that since most people have pretty good credit, the likelihood of having a credit-based insurance score negatively affect your rate is highly unlikely.

Myth #5: The Color of Your Car Makes a Difference

Contrary to popular belief, the color of your car does not have any impact on the price of your car insurance. For example, many drivers think that red cars or black cars will contribute to higher premiums, but the truth is that providers aren’t concerned about the color of the car at all. Insurers are more interested in other things such as make and model, year and body style, engine style, the age of the vehicle, and the age and record of the driver. With respect to driving behavior, insurers factor in your accumulated points for moving violations when determining your rates, which is important to note.

Buying Used Cars Makes More Financial Sense

Wednesday, July 8th, 2015

Although an obvious benefit to buying used cars can mean a less expensive purchase and cheaper monthly note, it is really the additional benefits of what can be done with those potential savings that can be life changing.

The Depreciation Factor

Most people already know that when it comes to buying a car, new or used, there are certain inherent risk factors involved, namely depreciation. Depreciation is the decrease in value that a car loses over time, and can vary depending on the make and model of the car. Depreciation of a vehicle starts the minute the car is driven off of the dealership lot.

Like it or not, depreciation comes with the deal; there’s no way around it. However, the only real way diminish the impact on your wallet is to either buy a car that has a traditionally high resale value, which requires a good bit of research on your part, or you can simply scale down your purchase to something more affordable, liked used cars. Bear in mind, by waging your bets with a vehicle that you believe has a high resale value, there is still a certain degree of depreciation that will ultimately affect the value of that vehicle.

Does Your Decision Have More To Do With Status?

For some, buying a new vehicle may have more to do with status than it does necessity, which ultimately affects the ability to make a practical decision. Financial experts strongly advise against financial decisions like this, especially ones that involve highly depreciative items. If need be, take a step back and examine the true nature of your intent in purchasing a new vehicle. Perhaps doing so can help you eliminate the desire to impress with something you truly cannot afford.

What You Should Consider Instead

The best way to demonstrate the additional benefits of what can be done with potential savings is to give an example. If you were to purchase a new car for about $50,000, depending on the depreciation of that car, you could be looking at a vehicle with a value of less than half of what you paid within a couple of years, although you may have barely made a dent in the repayment on the loan. In the housing market, this is what is referred to as upside down, meaning you owe more than the property, or, in this case, more than what the vehicle is worth.

Instead, what you could and should do is consider buying used cars. First of all, you already know that a pre-owned vehicle will cost a lot less than the $50,000 new one previously mentioned. If you were to consider the difference of purchasing used cars instead of new models, you may find that the savings could be a tremendously beneficial in helping you reach some other financial goals. Specifically, if you bought a $25,000 pre-owned vehicle with say a $250 monthly car note instead of a $500 monthly car note, you could take the difference of $250 each month and put those funds towards something else, like an investment that could contribute to your financial security.