Tag: Car Insurance

Best startup business credit cards

If you want to start a business, you’re going to need a business credit card. While many entrepreneurs fund the initial phases of their small business out of pocket, taking out a business credit card proves that you mean business – literally.

But which business credit card is right for your growing startup? We’ve got a list of the best startup business credit cards that meet a variety of business needs – whether you’re looking for a travel card to help make business trips a little more comfortable or a corporate card to issue to your new employees. We’ve also got tips on how to choose the best business card for your startup, how to increase your odds of getting accepted for a business credit card and how to make the most of your new card once you’ve got it.

Best credit cards for startups

  • No personal guarantee: Brex Corporate Card for Startups
  • Fair credit: Capital One® Spark® Classic for Business
  • Financing a startup: American Express Blue Business Cash™ Card
  • Cash back: Capital One® Spark® Cash for Business
  • Travel rewards: The Business Platinum Card® from American Express

Brex Corporate Card for Startups

Brex 30 Card

Our rating: 4.4 out of 5
Score required: Excellent
Type of card: Corporate travel
Spending categories: Rideshares, travel, restaurants, software subscriptions

Read full review

  • 8X points on rideshares, 5X on travel, 4X on restaurants, 3X on eligible Apple purchases and 3X on software subscriptions when you make daily card payments. Those rewards are 7X points on rideshares, 4X on travel, 3X on restaurants, 3X on Apple purchases and 2X on software subscriptions with 30-day card payments
  • 1 point per dollar on other purchases
  • 30,000 bonus points upon sign up and waived card fees for life (equal to $300+ value)
  • $5,000 credit for Amazon Web Services and 20% discount on annual Zoom subscription, along with other software discounts in your first year
  • $0 annual fee

Our take: With an application process that makes qualifying faster and easier than usual and a unique rewards program that offers up to 8X points on ride-sharing, the Brex Corporate Card is well-attuned to the needs of startup companies.

Why it’s the best startup business credit card with no personal guarantee

If your startup is at the point where you have a significant revenue stream and an office full of employees, you might be ready for a corporate card. Unlike your typical business credit card, which can be used by small business owners of any size (including solopreneurs and freelancers), corporate cards are designed to meet the needs of growing corporations.

In this case, that means no-cap rewards on four major spending categories – 8X Brex Rewards points on rideshares, 5X on travel, 4X on restaurants and 3X on software subscriptions depending on whether you make your card payments every 30 days or on a daily basis with Brex cash – as well as 1 point per dollar on all other purchases. Your startup will also be eligible for discounts on popular services, such as Amazon Web Services, Zoom and Dropbox, as well as a 30,000-point sign-up bonus.

Plus, it only takes a few minutes to get approved for the Brex Corporate Card. All you need to do is provide basic information about your business and link your corporate account. There’s no personal guarantee required, though you do need a minimum of $100,000 in your corporate bank account to be eligible for this card. The Brex Corporate Card has no annual fee and you’ll get five employee cards at no cost, but it’ll cost you $5 per month for each additional employee card beyond that.

As you use your Brex Corporate Card, your credit activity and payments will be reported to Experian and Dun & Bradstreet, both of which will help your business build its credit history.

Capital One® Spark® Classic for Business

Capital One® Spark® Classic for Business

Our rating: 2.6 out of 5
Score required: Fair to good
Type of card: Cash back
Spending categories: N/A

Read full review

  • 1% cash back on every purchase
  • Build business credit with responsible use
  • $0 annual fee

Our take: The Spark Classic card doesn’t offer the lowest APR or juiciest rewards; but it does help cardholders with damaged credit build a better credit score and earn a modest amount of cash back, so they can qualify for more generous cards over time.

Why it’s the best startup business credit card for fair credit

Your credit score shouldn’t hold you back from small business success – so don’t let your less-than-perfect credit prevent you from taking advantage of all the benefits a small business credit card can provide. Use the Capital One Spark Classic for Business credit card to help you build your business and your credit at the same time.

When you use the Spark Classic for Business, you’ll earn 1 percent cash back on every purchase. That’s a little lower than what you might earn with the top business credit cards, but if you practice responsible credit habits like making on-time payments and maintaining a low credit utilization ratio, your score should improve month-over-month – which means you might be eligible for an even better business credit card before you know it.

The Spark Classic for Business has no annual fee, which is one more reason why it’s a great card for people who want to get their business – and their credit – off the ground.

American Express Blue Business Cash™ Card

American Express Blue Business Cash™ Card

Our rating: 3.9 out of 5
Score required: Good to excellent
Type of card: Cash back
Spending categories: N/A

Read full review

  • 2% cash back on up to $50,000 in purchases per calendar year
  • 1% cash back on all purchases after that
  • 0% introductory APR on new purchases for the first 12 months (13.24-19.24% variable thereafter)
  • Spend over your credit limit with no penalty (as long as you stay within the over-the-limit amount)
  • Apply for 30-, 60- or 90-day Working Capital terms after first 6 months of membership
  • $0 annual fee

Our take: The Blue Business Cash card is a great option for small business owners seeking to create cash flow for a new or expanding business, thanks to its flexible credit limit and working capital terms.

Why it’s the best startup business credit card for large purchases

Startups often come with startup costs – which means you’re going to want a credit card that rewards big spending. The American Express Blue Business Cash Card is one of the top business cash back cards on the market, offering 2 percent cash back on up to $50,000 in purchases per calendar year and 1 percent cash back on all additional purchases.

This isn’t the only reason why you’ll want to use the Blue Business Cash Card to help you finance your startup costs. You’ll also get access to a flexible credit limit, making it possible to fund extra purchases during those months when you really need to invest in your business. (Be aware that you’ll need to cover both your minimum payment and your above-limit spending at the end of your billing cycle.) Plus, once you’ve had your Blue Business Cash Card for six months, you’ll be able to apply for working capital terms, a feature in which Amex will pay your vendors up front, and you’ll pay off the costs in 30, 60 or 90 days.

Capital One® Spark® Cash for Business

Capital One® Spark® Cash for Business

Our rating: 4.1 out of 5
Score required: Good to excellent
Type of card: Cash back
Spending categories: N/A

Read full review

  • 2% cash back on every purchase
  • $500 cash back if you spend $4,500 in first 3 months
  • $95 annual fee (waived first year)

Our take: If you want a simple business credit card with a superb cash-back rate, you will love the Spark Cash card.

Why it’s the best startup business credit card for cash back

If you want to earn as much cash back on your purchases as possible, consider the Capital One Spark Cash for Business card. Like the Blue Business Cash Card, the Spark Cash for Business offers 2% cash back – but unlike the Blue Business Cash Card, those cash back rewards don’t end once you spend $50K in a calendar year. Instead, you get an unlimited 2% cash back on every purchase.

You also get a welcome bonus – if you spend $4,500 in your first three months as a cardholder, you’ll earn a one-time $500 cash bonus. Just think about how you could use that money to grow your business (or to pay off your credit card balance).

The Spark Cash for Business credit card does include a $95 annual fee, but it’s waived the first year – and don’t forget that business credit card fees are tax-deductible.

The Business Platinum Card® from American Express

The Business Platinum Card® from American Express

Our rating: 4.4 out of 5
Score required: Excellent
Type of card: Travel
Spending categories: Flights, hotels

Read full review

  • 5X points on flights and prepaid hotels on amextravel.com
  • 2X points on travel purchases on amextravel.com
  • 1 point per dollar on other purchases
  • 50% more points (1.5 points per dollar) on purchases of $5,000 or more (up to 1 million bonus points per year)
  • 85,000 points if you spend $15,000 in first 3 months
  • Get 35% points back on a designated airline each year (up to 500,000 bonus points per year) when you pay with points and book your flight on amextravel.com
  • $595 annual fee

Our take: The Business Platinum Card from American Express offers generous bonus points and great travel perks – including the best lounge access around – for frequent business travelers.

Why it’s the best startup business credit card for travel

If your startup requires you to spend a lot of time working out of hotel rooms, you’re going to want a credit card that rewards travel spending. The Business Platinum Card for American Express is ready to help get you where you need to go.

Earn 5X Membership Rewards points per dollar when you purchase flights and prepaid hotel rooms through amextravel.com, 2X points on additional travel purchases made through amextravel.com and 1 point per dollar on all other purchases – unless you make a purchase of $5,000 or more, at which point you’ll earn 1.5 points per dollar. You’ll also be able to access an incredible welcome bonus in your first three months of membership: 85,000 points after you spend $15,000 on qualifying purchases.

Want to maximize those Membership Rewards points after you’ve earned them? We’ve got a guide to help you get started, but here’s one tip: Use Membership Rewards Pay with Points to book a flight with your selected qualifying airline, and you can get 35 percent of your points back (for up to 500,000 bonus points per calendar year).

The Business Platinum credit card also gets you access to the American Express Global Lounge Collection, a year of complimentary Platinum Global Access from WeWork (for cardholders who enroll between Feb. 15 and Dec. 31, 2019) and a $200 airline fee credit, among other perks. Be prepared to pay a $595 annual fee for the privilege of using this card – but if you travel often enough, it’ll be more than worth it.

Compare top startup business credit cards

Rewards Annual fee
Brex 30 Card
  • 7X points on rideshares, 4x on travel, 3x on restaurants and 2x on software subscriptions
  • 1 point per dollar on other purchases
  • 30,000 bonus points upon sign up
$0
Capital One® Spark® Classic for Business
  • 1% cash back on every purchase
$0
American Express Blue Business Cash™ Card
  • 2% cash back on up to $50,000 in purchases per calendar year
  • 1% cash back on all purchases after that
$0
Capital One® Spark® Cash for Business
  • 2% cash back on every purchase
  • $500 cash back if you spend $4,500 in first 3 months
$95 (waived first year)
The Business Platinum Card® from American Express
  • 5X points on flights and prepaid hotels on amextravel.com
  • 2X points on travel purchases on amextravel.com
  • 1.5X points on eligible purchases over $5,000
  • 1 point per dollar on other purchases
  • 85,000 points if you spend $15,000 in first 3 months
$595

How to choose a business credit card

Ask these questions before choosing which business credit card might be best for your growing startup:

How will you use the card?

If you’re going to use your business credit card to finance a large purchase, look for a card with a long 0% introductory APR period. That way, you can maximize the time you have to pay off your purchase without paying anything extra in interest. 

If you’re just going to use it for day-to-day expenses, think about what those expenses are. Look for a card that will reward your everyday purchases – like travel, office supplies or utilities – at a boosted rate.

Lastly, think about who will be using the card. If you want your employees to be authorized users, look for a card that offers free employee cards or custom spending limits. 

What kind of rewards do you want?

Are you hoping to earn some cash back on your everyday purchases, or are you shooting for rewards-funded travel? If you’re searching for a travel rewards card, it’s important to consider additional perks and benefits, like rental car insurance and airport lounge access.

What is your credit score?

Your personal credit will probably be pulled when you apply for a business credit card. If your score isn’t great, apply for a card that’s within your range. Otherwise, it’s a good idea to work on building your credit before you apply. 

Getting a line of credit in your business’s name can also be useful if you’re going to take out a business loan in the near future. Your business has a credit score too, and a positive borrowing history can contribute to a good business credit score, giving you a lower interest rate when you apply for business loans. If that’s important to you, make sure that the card you’re applying for reports to at least one – or all three – of the dominant business credit bureaus. 

How to apply and get approved for a business credit card

Applying for a business credit card is a lot like applying for a personal credit card. You’ll need to provide basic personal information, such as your name, address and income. You’ll also need to provide basic business information, such as your business’s name, address and revenue. Once you’ve filled out the application, expect a hard pull on your credit as the credit card issuer determines whether you are eligible for the card.

If you want to increase your odds of getting approved, here are a few tips:

  • Check your credit score to learn where you stand. If you don’t already have access to your credit score, use a free service to learn whether your credit is fair, good, excellent or needs work – and then use that information to find credit cards designed for people with your credit score.
  • Build your personal credit score before applying for a business credit card. Lenders check your personal credit history before issuing business credit cards, so consider doing some basic maintenance on your credit score before applying. Disputing errors on your credit report, paying off revolving balances and requesting credit limit increases can all improve your score and make you eligible for more business credit cards.
  • Use our CardMatch service to quickly identify which credit cards might be right for you. There’s no impact on your credit score, and you might receive special offers and pre-qualified matches.

Pros and cons of using a credit card for your startup

There are a lot of advantages (as well as some disadvantages) to using a credit card to help fund your startup:

Pros

  • Credit card financing is easily obtainable if you already have good credit and credit cards in your name.
  • You can cover business expenses during periods of low cash flow or finance a large purchase that will help you attract more customers and grow your revenue.
  • You can also use earn rewards on everyday expenses or earn points that you can put towards business travel – both of which can save your business money in the long run.
  • With timely payments, you can use a business credit card to build a credit history for your new business.
  • You can use credit card purchase and travel protections to insure purchases for your business.
  • Many business cards offer valuable perks for small business owners, such as airport lounge access, discounts on business purchases or credits toward commonly purchased items.
  • Credit cards can make expense tracking easier – many cards allow you and your employees to upload and track your receipts from your mobile phone and to download your expenses to Quickbooks and other accounting software.
  • You can automate repeating purchases, such as software licenses.

Cons

  • For financing a business, a small business loan might offer lower interest rates than a business credit card.
  • Likewise, using crowdfunding to get seed money (and customer buy-in) before launching a new product might be a better option than putting all your expenses on credit.
  • If the card requires a personal guarantee, your business credit card could affect your personal credit score.
  • Credit cards have high interest rates. Unless your business card comes with a 0 percent offer for new purchases, it can be very expensive to carry a balance on it.
  • Credit cards can foster sloppy financial habits if you’re not disciplined about paying off your balance each month.
  • Overall, since they’re usually linked to your personal credit history and charge high interest, credit cards can be a very risky means of funding a startup.

See related: Should you fund your startup business with a credit card?

Final thoughts

Getting a business credit card is an important part of growing a small business. For many small business owners, it’s one of the first big steps in separating your personal finances from your business finances. When it’s time to apply for a business card for your startup, think about which problems you’d like your business credit card to solve – and then look for cards that provide the solution you’re looking for. Think of it like writing a job description and finding the candidate that’s the best fit.

As your startup continues to grow, start thinking beyond business credit cards. The next step might be a small business loan, a crowdfunding project or a group of investors. Business credit cards are excellent tools to help you cover day-to-day expenses while earning rewards, but they aren’t the only way to finance a startup – and you’ll know when it’s time to start exploring other options.

Source: creditcards.com

A Millennial’s Guide to Getting Your First Car Loan

auto-loan-down-payment

Buying a car is almost a rite of passage. Making that first car purchase, negotiating with the seller, and arranging financing (if you need an auto loan) all require a certain amount of savvy.

And, once you successfully achieve the car-buying milestone, another signpost looms in the distance: Refinancing.

Whether you’re getting an auto loan for the first time, or you want to refinance your existing car debt, it’s important to be an informed consumer. Here’s what you need to know.

Get your finances in order

Before beginning your car search, you need your finances in order, according to Joe Pendergast, the vice president of consumer lending for Navy Federal Credit Union.

“Know your budget, check your credit score, and review your existing credit accounts to ensure they are reported accurately,” Pendergast said. Your credit situation can directly impact the interest you pay on your auto loan.

Emily Shutt, a certified financial coach who works closely with millennial women to help them manage a variety of money issues, suggested calling around to different dealers and banks or credit unions to see what credit bureau they use to check your score. Then you can check your report for errors and have them fixed before you talk to someone about financing your car purchase.

“Having errors on a credit report can negatively impact score, which can put you at a huge disadvantage when you’re negotiating for an auto loan interest rate,” Shutt said.

You should also know ahead of time where you stand with your budget. Use an online loan calculator to determine what you can afford in terms of a monthly payment. For example, if you think you can handle a $305 monthly payment, and you have the credit to get an interest rate of 2.9% for a five-year loan, you might feel you can afford to borrow up to $17,000 for a car.

Save up for a down payment

Just because you might be able to borrow so much for a car doesn’t mean you necessarily should. In fact, saving for a down payment makes a lot of sense, Shutt said. Not only does having a down payment help you to better negotiate your loan rate, but it also can allow you a shorter loan term and save you money in the long run.

Play around with the numbers a little with an online calculator. If you can put $7,000 down, so that you borrow only $10,000 of that $17,000 car, you could maybe get an interest rate of 2.5% and a loan term of three years. Even better, your monthly payment would only be $289 — and you’d save $1,494 in interest.

The less you borrow, the more money you have in the end. And that’s money you can put toward investing in your future, rather than paying interest to someone else.

Know what you want — and what it costs

Once your finances are in order and maybe you have a down payment saved up, it’s time to figure out what you can actually buy. Avoid over-borrowing by knowing what you want in a car and having an idea of what it costs, Shutt suggested.

“Everything should already be online so you can get a sense of what all the options are,” said Shutt. A little research can go a long way toward helping you get a sense for which cars will fit into your budget.

Shutt pointed out that the job of salespeople is to get you to spend as much money as possible. The more you spend, the more you have to borrow — and the more you’ll pay in interest. “Confidently stand your ground when a salesperson tries to upsell you or steer you in another direction,” she said.

Pendergast agreed on the need to research your car choices ahead of time. “Know the price other dealerships in the area are offering so you can make an informed purchase,” he said.

It’s even okay to play one seller’s price off another’s to get the best deal. Don’t be afraid to let the other dealerships know you’re shopping around. They’ll be more inclined to negotiate with you, potentially resulting in a better deal.

Get an auto loan quote from a bank or credit union

Before you ask for dealer financing, suggested Pendergast, talk to a bank or credit union.

“You should see what type of loans your financial institution has to offer,” said Pendergast. “This will give you guidance for your budget, but will also increase your purchasing power to help you in negotiations, regardless of the dealer’s proposition being on par with the lender’s.”

Donald E. Peterson, a consumer lawyer with almost 30 years of experience, warned that dealer financing still often requires the involvement of a bank or credit union. Dealers submit your information to lenders and get interest rates quotes back.

“Sometimes dealers mark up the interest rate above the rate banks would buy the loan at,” Peterson said. “The bank and the car dealer split the excess interest, usually 50-50.”

This practice isn’t just limited to banks, either. “Some credit unions have entered into interest-rate kickback agreements with car dealerships,” Peterson said. “You must apply to the credit union yourself to get the best rate.”

Starting with a financial institution allows you to get an idea of what’s available to you. Then, you’re in a position where a dealer who wants to finance you has to match the rate you’ve already been offered, rather than steer you toward an alternative arrangement.

Consider a cosigner

With my own first auto loan experience, I had to deal with the fact that I had a thin credit file. I didn’t have enough credit established to get a car loan without an unacceptably high interest rate.

I went through the steps of creating a budget and deciding how much I could afford, including factoring in my car insurance costs. However, after checking my credit report, I realized that having a credit card for six months wasn’t enough for me to establish much of a credit history.

After compiling research about the types of used cars I could afford, and how my earnings from my job were enough to cover an auto loan payment, I approached my parents. My dad was willing to cosign on a modest car loan through his credit union.

My interest rate — and my monthly payment — were lower because I had cosigner with good credit. I made all my payments on time, helping build my credit history so that the next time I bought a car, I was able to get a good interest rate without the need for a cosigner.

As you research your options, don’t forget about the possibility of using a cosigner. If you don’t have the credit history to get a good auto loan rate on your own, borrowing someone else’s good name can help you save money — while at the same time allowing you a way to establish your own credit for the future.

Don’t fall for the monthly payment scheme

While you do want to figure out what monthly payment you’re comfortable with, you don’t want to get caught up in it at the dealership, cautioned Shutt.

“Focus on the all-in price of the car,” said Shutt. “If the salesperson can get you to verbalize a monthly payment target, they’ll just manipulate other factors like the duration of the loan.”

When that happens, Shutt pointed out, you might end up hitting your targeted monthly payment, but long-term interest charges and other factors could mean that your car ends up being a lot more expensive. She said you should figure out about how much you’ll pay each month over a loan term you’re comfortable with, and then buy a car with a final price that fits those parameters.

“Take your time, and don’t be manipulated,” Shutt said. “If you’re not comfortable negotiating, bring a friend or family member who can support you in sticking to your budget.”

What about refinancing?

In some cases, you might discover that you qualify for a lower auto loan interest rate than you currently pay.

“Maybe you’ve been making timely payments for a year or two and your credit score has gone up,” said Shutt. “Now you can consider refinancing the loan.”

However, it’s important to be careful moving forward. Just as you shop around for the best auto loan rates on a new loan, it makes sense to shop for refinancing rates. Check with a few banks and credit unions to see if you can get a few quotes for refinancing.

When you refinance, watch out for lengthening the loan term. If you only have three years on your term, it might not make sense to refinance to a five year loan. Instead, only refinance what you have left. You could save on interest charges and still get rid of your car debt in the original time frame.

Shutt also recommended looking online for car loans. Compare the rates you find with online auto loan refinancing platforms to what your local financial institutions offer. By playing different lenders off each other, you could strike a better bargain — especially if you have good credit.

Know your finances and be ready to negotiate

Auto loans are a massive industry, with more than $1 trillion owed to U.S. lenders. Rather than being just another statistic, consider how you can come out on top.

Know your finances and understand what you can expect, Pendergast said. When you know where you stand, and when you research ahead of time, you can call dealers and lenders out. Shop around for the best auto loan rates and terms, and let dealers know you’ve done your homework, so that negotiations will go much better, saving you time and, importantly, money.

 

If you want to be sure your credit is good enough to purchase a car, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Image: iStock

The post A Millennial’s Guide to Getting Your First Car Loan appeared first on Credit.com.

Source: credit.com

How COVID-19 is Affecting Auto Loans

COVID-19 is having a massive impact on the global economy and very few industries have been untouched by it. If your business relies on employees working in a physical space and profits only when people are willing to shop and spend, there’s no escaping it. 

It’s no surprise, therefore, that the auto industry has been so negatively affected. In a recent guide, we looked at the many auto loan relief options that manufacturers offering in light of the coronavirus. In this guide, we’ll highlight the ways this industry has been stung by the pandemic and look at what it means for the future of the US automobile and car financing sectors.

How is the Coronavirus Affecting Car Sales?

The automobile manufacturing industry experienced a minor surge at the beginning of 2020 but COVID-19 began to impact sales heavily in March. Many companies, Fiat Chrysler and General Motors included, began the year with strong momentum behind them, but March hit them hard and negated all the gains made during the first two months.

Both of these companies recorded losses for the first quarter of 2020, with Fiat Chrysler losing 10% in total.

Toyota, one of America’s biggest manufacturers, also recorded massive losses for March, with daily sales dropping by nearly a third during this month.

All of this is to be expected. The US has yet to announce the sort of national lockdowns we have seen in countries like the United Kingdom, Italy, Spain, and Greece, but many citizens are in self-isolation, countless businesses have shut their doors, and there are fewer cars on the road as a result.

Combine this with the fact that people are losing their jobs and worrying about their futures, and it’s easy to see why car sales have been affected so severely. 

What are Manufacturers Doing About It?

Automobile manufacturers have moved quickly to stem the rising tide of financial devastation caused by COVID-19. Fiat Chrysler, for instance, is offering improved auto loan conditions to convince consumers to make sizeable purchases and keep the wheels turning. It has also made it easier to purchase a car for those in self-isolation or lockdown.

You can now buy a Fiat Chrysler online, with options for trade-ins, auto loans, and pretty much everything else you would get when buying in person.

They’re making it easier for you to buy because they need you to make that commitment. At the same time, the production of many new vehicles has been halted.

While some plants and showrooms are still open in the United States, Europe has experienced an almost continent-wide shutdown, leading to a decreased demand. 

Manufacturers are also anticipating that things will get worse, as many experts predict that the USA will experience a spread similar to that of Spain and Italy.

How Has COVID-19 Hurt the Automobile Industry?

We have already touched upon some of the ways that COVID-19 has impacted the automobile industry, but the problem goes far beyond people not being able to make it to their local showrooms. Furthermore, if events in Europe are anything to go by, the problems will only get worse and it could be several years before the automobile sector recovers.

Here are a few reasons the industry has been hit hard:

Uncertainty

There is a genuine fear that the COVID-19 pandemic will remain for all of 2020 and even beyond that. It seems unlikely that it will last for that long, but if the country doesn’t go into lockdown and a vaccine isn’t produced, it’s possible. 

With this in mind, many consumers are putting off buying new cars out of fear that they simply won’t need them. New cars depreciate rapidly and can lose 20% in the first year. What’s the point of spending $30,000 on a new car if it will be worth $24,000 by the time you actually get behind the wheel?

Struggling Stock Markets

The stock market doesn’t just impact big companies and investors. It also affects average American families who have their money tied into savings accounts, stocks, and pensions. Savers have lost a lot of money and are worried that they’ll lose even more in the near future, making buying a $30,000+ vehicle incredibly reckless. 

Price of Gas

One of the few things that the automobile industry has on its side is the price of fuel, which has plummeted in the past few weeks. The problem is, no one cares about the price of fuel when they’re stuck inside the house worrying about their health and their jobs.

Closed Plants

Automotive plants can’t simply shut down for a few weeks and then start up again when everything has cleared up. Many plants were already struggling to keep things together and once production stops and their profits disappear, they may close down entirely, taking hundreds, if not thousands of jobs with them. 

Bottom Line: Car Sales After COVID-19

It’s highly likely that the hard times will continue for the manufacturing industry. As the coronavirus continues to spread across the country, manufacturing plants will struggle to retain employees, showrooms will shut, and fewer Americans will be willing to pay the $30,000+ required for a new vehicle.

Whether this impacts the future price and availability of automobiles remains to be seen, but it’s highly likely that we’ll see some massive changes in this industry. America’s best-loved manufacturers will lose millions and could be sent to the brink of financial destruction, while many salespersons and mechanics will likely lose their jobs as demand drops and garages/showrooms close down. 

 

How COVID-19 is Affecting Auto Loans is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Mint Money Audit: Managing Money When You Make Enough

Anna’s email requesting help with her finances began with a unique confession.

“Farnoosh, my money problem garners little sympathy,” the 32-year-old wrote. “My issue is that I make too much of it.”

Now, THIS is interesting, I thought. I immediately followed up with many questions.

Here’s what I learned through our conversation:

The Denver-based Mint user earns $220,000 per year as an engineer. Anna’s also benefited from years of big bonuses and her net worth, not including her home equity, is close to a million dollars.

After paying taxes and health benefits and maxing out her 401(k), Anna takes home between $8,000 and $10,000 each month. Her expenses mainly consist of a $1,200 mortgage payment, car insurance, gas, food and utilities, amounting to maybe a few thousand dollars per month.

The rest either goes into savings where she stashes about $5,000 to $10,000 for unexpected expenses or into a brokerage account where she has roughly $800,000 invested. A wealth management firm manages that portfolio and charges, she says, an annual 1% fee.

Anna has no consumer debt, besides her mortgage, which amounts to about $338,000. It’s a 30-year fixed rate loan with a 2.85% interest rate. The home has appreciated in recent years with about $100,000 in equity (including Anna’s initial 20% down payment).

So, what is the problem, exactly?

“My big worry is that I don’t have the habits to manage money well,” Anna told me. Her sizeable bank balance has her feeling financially free, although she worries about getting carried away with spending sometimes.

“When I see money in my bank account I rationalize that ‘yea, that vacation is doable. I don’t hold back on the things that may seem frivolous,’” she says. But It seems she wants more financial grounding and to be able to evaluate expenditures and price tags more critically.

Anna’s situation may be unique, but I think relatable in the sense that we all would like to feel more thoughtful with how we spend, save and invest. And while some may do well with earning money, it should not be assumed that they can also manage that money well.

I applaud Anna for wanting to be sure that, even with an impressive net worth, she is actually making wise financial decisions.

Here’s my advice.

Take a Deep Breath

No need to panic when spending on things and experiences that you enjoy. From what I can tell Anna’s prioritizing the serious financial stuff first like contributing the max to her 401(k) and saving all of her annual bonuses in a brokerage account. She has no credit card debt and pays all her bills on time. That’s terrific.

Sometimes we just want to hear that we’re on the right track with our money and I have a very simple way to measure this:

If you manage each paycheck by saving, investing and paying all your bills first, then by all means, you’re entitled to have fun with whatever is left without any fear or regret. Am I right?

If you’ve done the good work of taking care of your future with your money, then don’t hesitate treating yourself and others with the remaining funds today. Splurge away and enjoy your hard-earned money. And remember to enjoy the moment.

Ditch Your Money Managers

I do think Anna could find a better home for her investments.

Paying one percent of her managed assets to this firm may not seem that high of an annual fee. But when you think about Anna’s balance of $800,000, that’s $8,000 this year. What about next year and the decades after that as she contributes more to the account? That fee, compounded over the next 30 years, will amount to – conservatively – over one million dollars. Ouch.

That doesn’t even factor in the expense ratios for each mutual fund that’s in her portfolio.

If all Anna seeks is investment assistance, she may be better suited stationing her money with an automated wealth platform or robo-advisor where her money is largely invested in low-fee index funds or exchange-traded funds (ETF) and the portfolio management fee is typically 0.50% or less.

Of course, breaking up with your financial advisor is not always so simple. It’s especially hard for Anna, as she equated her money managers to “father figures.”

If I were Anna, I would just explain to my advisors over email something like, “I want be more conservative with my money and that includes being extra mindful of the various fees that I’m paying. To that end, I’ve decided to manage my money more independently. I’m sure you can understand. I appreciate your help over the years. Please let me know next steps.”

Planners know the drill and are used to having clients end relationships.  Stay strong. Nobody can really argue with the fact that saving money is a good thing!

Establish Short and Long Term Goals

Anna wants to spend and save with more conviction. I think having some concrete, tangible goals can help.

For example, she shared that she’d like to get married, have a family and own two homes – one near her office downtown and another in the mountains as a getaway.

So, the next step is to understand what these goals cost. What are, say, the going prices on a vacation home in her state? How much might she want to stash in a separate account for the future down payment on this property? Knowing the underlying costs of her goals can better direct how much to spend elsewhere.

Next time she’s planning a vacation, she may be more inclined to price compare or hunt down better deals, as opposed to just judge whether the trip is financially “doable” by the amount of money in her bank account. Now she’ll have the image of that second home and its costs and will make a more informed choice.

Contribute to a Cause

Last but not least, when you feel you make more than enough, like Anna does, this is a great opportunity to be extra charitable. If she’s seeking a way to give her money more meaning and feel purposeful in her financial life, this is a truly wonderful way to go about it. Discover a cause that you’re passionate about and make an impact as a volunteer and donor.

Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at farnoosh@farnoosh.tv (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

The post Mint Money Audit: Managing Money When You Make Enough appeared first on MintLife Blog.

Source: mint.intuit.com

How To Get The Most Out Of Your Auto Insurance Coverage

Recent data suggests that the average driver will spend close to $100,000 on car insurance 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 while car insurance policies 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 on auto insurance premiums and get the most value out of this necessary expense.

Build Your Credit Report

Never underestimate the value of a high credit score and a clean credit report. Not only can it help when applying for a car loan, increasing the value of the car you can purchase and decreasing the interest rates you’re charged, but it will also reduce your car insurance rates.

There is no easy and quick way to turn a bad credit report into a good 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

A new car is a great way to get a high-tech, customized vehicle, but it’s not ideal if you’re looking to save on 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 your auto insurance 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 a car accident 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

Your driving record is just as important as your credit report, if not more so. The more at-fault accidents, traffic tickets, and insurance claims you have, the higher your car insurance rates 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 to insurance companies, but there are a few things you can do to expedite this process. The first is to take a 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 major insurance companies and can track your driving habits to determine what kind of driver you are. If you’re driving safe and doing very 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 that’s the best thing to do. $100 a month seems infinitely more manageable than $1,200 a year. 

It is an attitude that many people have, and it’s 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 your car insurance 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 $3,000 car insurance 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 your insurance rates.

Combine Policies and Vehicles

Insurance companies that offer multiple types of insurance tend to offer discounts when you purchase several products from them.

Known as multi-policy discounts or “bundling”, these offers are common with homeowners insurance and auto insurance, but they are also offered with renters insurance and life insurance.

You can combine several vehicles onto the same auto insurance 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.

Shop Around

Before you settle on a single policy, shop around, compare as many car insurance quotes as you can, try multiple different insurance options (uninsured/underinsured motorist coverage, comprehensive coverage, 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. 

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

Car insurance companies 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, 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 an auto insurance 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: Best Auto Insurance Companies

​Car insurance coverage 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 offers personal injury protection, collision insurance, medical payments, uninsured motorist 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 cheap bodily injury liability coverage and property damage liability coverage, and giving policyholders a level of care and attention that they might not find with the bigger, national providers. USAA, which offers cheap car insurance 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 no right coverage. That’s why it’s important to 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.

Source: pocketyourdollars.com

Here’s How to Bundle and Save on Your Insurance

If you have home and auto insurance, you may save money by bundling your policies. Most companies offer bundles that can save you an average of 10-25% on each policy. That’s nothing to sneeze at since AAA estimates that the average cost of car insurance is about $1,202 annually, and some people pay much more […]

The post Here’s How to Bundle and Save on Your Insurance appeared first on The Simple Dollar.

Source: thesimpledollar.com

Learning How To Survive On A College Budget

Find out how to survive on a college budget here. This is a great list!College is expensive and everyone knows that.

Between paying for tuition, parking, textbooks, extra fees, and everything else, you also have basic living expenses to pay for as well.

All of these costs are either brand new or somewhat new to you most likely as well, so you might not even know how to survive on a budget, let alone a college budget.

Don’t worry, though, surviving on a college budget is possible. Learning how to save money in college is possible!

Related post: How I Paid Off $40,000 In Student Loans In 7 Months

Whether you are trying to survive the whole year off of what you made over the summer or if you have a steady job throughout the school year, there are ways to budget your money and not fall into any extra debt. Plus, you can still enjoy your college years on a low budget as well!

Below are my tips on how to survive on a college budget.

 

Use your student ID.

Your student ID is good at many places beyond just your college campus. Before you buy anything, I highly recommend seeing if a company offers a student discount.

Your student ID can be used to save money at restaurants, clothing stores, electronics (such as laptops!), at the movies, and more. You may receive a discount, free items, and more all just by flashing your student ID.

After all, you are paying to go to college and you are paying a lot. You might as well reap one benefit of paying all of those high college costs.

 

Make extra money.

You may need to look into making extra money if you just don’t have enough to survive on. I am a firm believer in making extra money and I think extra time can be wisely spent doing this.

Some online side gigs with flexible schedules include:

  • Blogging is how I make a living and just a few years ago I never thought it would be possible. I made over $150,000 last year by blogging and will make more than that in 2015. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $3.49 per month plus you get a free domain if you sign-up through my tutorial.
  • Survey companies I recommend include Survey Junkie, American Consumer Opinion, Product Report Card, Pinecone Research, Opinion Outpost, and Harris Poll Online. They’re free to join and free to use! It’s best to sign up for as many as you can because that way you can receive the most surveys and make the most money.
  • InboxDollars is an online rewards website I recommend. You can earn cash by taking surveys, playing games, shopping online, searching the web, redeeming coupons, and more. Also, by signing up through my link, you will receive $5.00 for free!
  • Swagbucks is something I don’t use as much, but I do earn Amazon gift cards with very little work. Swagbucks is just like using Google to do your online searches, except you get rewarded points called “SB” for the things you do through their website. Then, when you have enough points, you can redeem them for cash, gift cards, and more. You’ll receive a free $5 bonus just for signing up today!
  • Check out 75 Ways To Make Extra Money for more ideas.
  • Read Best Online Jobs For College Students

 

Use coupons to stay on a college budget.

Just like with the above, you may want to start using coupons.

By doing so, you can save money on nearly everything. You can find coupons in newspapers, online, and in the mail. They are everywhere so you should have no problem finding them and saving money today.

Related post: How To Live On One Income

 

Learn how to correctly use a credit card or don’t have one at all.

Many college students fall into credit card debt, but I don’t want you to be one of them.

Many college students will start relying on their credit cards in order to get them through their low college budget, but this can lead to thousands of dollars of credit card debt which will eventually seem impossible to get out of due to significant interest charges that keep building up.

In order to never get into this situation, you should avoid credit cards at all costs if you think you will rely on them too heavily.

You should think long and hard about whether you should have one or not. Just because many others have them doesn’t mean they know what they’re doing! However, if you think you will be good at using them, then there are many advantages of doing so.

Related post: Credit Card Mistakes That Can Lead To Debt

 

Only take out what you need in student loans.

Many students take out the full amount in student loans that they are approved for even if they only need half.

This is a HUGE mistake. You should only take out what you truly need, as you will need to pay back your student loans one day and you will most likely regret it later.

I know someone who would take out the max amount each semester and buy timeshares, go on expensive vacations, and more. It was a huge waste of money and I’m still not even sure why they thought it was a good idea.

Just think about it – If you take out an extra $2,000 a semester, that means you will most likely take out almost $20,000 over the time period that you are in college.

Do you really want to owe THAT much more in student loans?

 

Skip having a car.

Most campuses have everything you need in order to survive – food, stores, and jobs. In many cases, you do not need to have a car whatsoever.

By foregoing a car, you may save money on monthly payments, maintenance costs, car insurance, gas, and more.

Related post: Should We Get Rid Of A Car And Just Have One?

 

Eat out less.

Now, I’m not saying you should stop eating out entirely if you are trying to survive on a college budget. I know how it is to be in college and to want to hang out with everyone. These are your college years after all.

However, you should try to eat in as much as you can, make your own meals, and try to eat out only during happy hours or when food is cheaper, such as during lunch time. Eating out can ruin your college budget!

 

Have a roommate.

The more people you live with, generally the less you will pay when it comes to rent and utilities. If you are living on your own, then you may want to find roommates so that you can split the costs with them.

This will help you to lower your college budget and you may even find some awesome friends.

Related post: What I Learned Having Roommates

What college budget tips do you have?

 

The post Learning How To Survive On A College Budget appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

2020 Financial Crisis Auto Loan Relief

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, we’ll 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 haven’t been seen for years. To make matters work, the country’s 9.5 million+ self-employed workers have seen their incomes half. 

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 world’s biggest manufacturers have established auto loan relief programs:

Ford

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 customer’s 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.

Hyundai

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. 

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

Nissan is following in the footsteps of many major creditors and lenders by working with customers on a case by case basis. If you’re feeling the strain of the crisis, whether because you’ve 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 won’t 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 Nissan’s luxury brand.

Kia

Kia announced that all 0% APR borrowers could defer payments for up to four months. Borrowers who don’t 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.

General Motors

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 you’re experiencing hardship, you can contact GM directly, tell them what you’re 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

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 you’re 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 vehicle’s 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 won’t get it, making repossession something that lenders are keen to avoid.

When you’re 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 don’t have many other debt relief options when it comes to auto loans, as it doesn’t make sense to do a balance transfer and debt settlement simply doesn’t work here. But if you contact your lender, they’ll 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, what’s 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.

Source: pocketyourdollars.com

What Is Uninsured Motorist Insurance?

What is Uninsured Motorist Insurance?

If you buy or lease a car, you’ll need to arrange for insurance coverage. Not only is it the law in most states, it will also protect your bank account in the event of an accident. However, if you’re involved in an accident and the other driver doesn’t have car insurance, you could run into problems. That’s the thinking behind uninsured motorist insurance. 

Compare checking accounts here. 

Uninsured Motorist Insurance Basics

If two people who both have car insurance get in a car crash, they exchange insurance information. The other driver’s insurance company generally pays your expenses if you’re in a crash. So what happens if the other driver doesn’t have insurance? There’s no one to pay you, cover your car repair or replacement or foot your medical bills if you’re injured. Your own car insurance may cover those costs, but it depends on the plan.

That’s where uninsured motorist insurance comes in. Uninsured motorist insurance policies offer protection against property damage or personal injury resulting from a run-in with an uninsured driver. There are a lot of bad drivers out there, and plenty of people who drive regularly but can’t afford car insurance. Have a run-in with one of them and you could end up covering your own medical and car repair bills.

In 22 states and the District of Columbia, drivers are required to have uninsured motorist insurance, so if you have vehicle insurance you’re covered in the event of a crash with an uninsured driver. But if you live in a state that doesn’t require uninsured motorist coverage, your regular car insurance policy may not protect you from bills if you’re in a crash with a driver who doesn’t have car insurance.

Check out our budget calculator.

Is Uninsured Motorist Insurance Necessary?

What is Uninsured Motorist Insurance?

If you live in a state that requires uninsured motorist coverage as part of the minimum coverage requirement for all auto insurance policies, you have at least some protection from uninsured drivers. You can always call your insurance company to check on the kind of coverage you have and discuss your coverage options.

If you live in a state that doesn’t require uninsured motorist coverage, the question becomes: Should you buy uninsured motorist insurance as an add-on policy to your regular car insurance? Before you decide, it’s worth pricing it out.

First, you can call your car insurance provider and check what level of coverage you already have against uninsured motorists. Your existing plan may provide some level of protection against medical bills and/or car repair bills resulting from a crash with an uninsured motorist.

If you don’t have any coverage or if you think your coverage levels are insufficient, you can ask your insurance provider how much it would cost you to add uninsured motorist insurance to your coverage package. You can also get quotes from other car insurance companies and opt for the policy that provides the best coverage for the lowest price.

Uninsured motorist insurance can give you some extra protections, too, such as coverage in the event that a hit-and-run driver crashes into your car or in the event that you’re struck by a vehicle as a pedestrian. So even those with built-in protection against uninsured motorists through their regular car insurance may be tempted to add extra coverage.

Related Article: All About Car Loan Amortization

Bottom Line

What is Uninsured Motorist Insurance?

Just because you have car insurance that you’re paying for every month doesn’t mean you’re protected in all eventualities. If reading this article has made you nervous that you might not have enough – or any – protection against uninsured motorists, this could be a good time to get your insurance company on the phone, particularly if you live in a state with a high percentage of uninsured drivers.

Photo credit: Â©iStock.com/bowdenimages, Â©iStock.com/bowdenimages, Â©iStock.com/vm

The post What Is Uninsured Motorist Insurance? appeared first on SmartAsset Blog.

Source: smartasset.com