Cheap Monthly Car Insurance

Questions and Answers

Your Questions About Cheap Monthly Car Insurance Payments

August 3, 2013

William asks…

Can I trade in my car as a down payment?

I would like to buy a 55k porsche and my father is going to cosign with me. I dont think his credit score is absolutley perfect so they may ask for a down payment???( which they might not?) if so can i use my 1998 volvo v70 that we bought brand new and is under my name now as a tradein/downpayment?

Administrator answers:

When reading a question like this, the thought that comes to mind is “do you know what you’re actually talking about?”

Let’s just look at the numbers for a moment. A $55K Porsche will cost you a little $60k when it’s all said and done. Now, assuming you have a V70 in near perfect condition, low mileage, and with desirable options, that means you’ll be financing about $58k. Right here there’s a problem, since any company providing credit is unlikely to offer such a loan even to someone with outright good credit… But let’s just go on and ignore that point for the moment.

Assuming you could finance it, you’d have a monthly payment of around $1350 (probably higher in reality since your loan would have a higher interest rate given the small down payment and credit history). When you consider insurance, and maintenance, you’ll probably find you general cost of ownership a little over $1800/month.

The next gotcha will be that a Porsche is not really suited to be your only car. While they are fantastic and reliable and can stand up to regular use just fine, they are limited in size and heavy use will push your maintance costs (and cosumable costs on things like high performance tires) much higher. In the end, it will be cheaper to figure in a cheap daily driver (a few thousand to buy, cheap insurance, etc). So figuring in the cost of that car, you are looking at $2200-2500 each month?

So, if you can afford that, why not simply put off buying it a few months, and then you’ll have your actual down payment! And if you cannot do that, then why are you look at something you cannot afford?

Michael asks…

When is the best time to buy a car for saving my money (Toyota clearance model 2007)?

As you know rigth now some dealer off price up to couple thousand dollars for each model year 2007 for Toyota. I dodn’t know buy model 07 during this year or wait until next year. Which one I can save my money when I buy a car model 07?

Administrator answers:

Here is the Issue. That 2007 depreciates at a rate of 2% of List price a month from introduction (usually october) so if the car lists for 25,000 its value is dropping about $500 a month. It is now August. So unless you can get about $6000 off list it is not a good deal. In todays market unless you like wasting money I would buy a 2-3 year old Camery like program car or a off lease unit. Let some one else pay for all that depreciation a car goes through in the first 2 years. If your hell bent on having a new car get a one when they first come out in the fall and don’t buy a left over you never really get that great a deal on a left over and the selection is limited. Also do not get financing more the 48 months 60 at the most. If you follow these rules you will never be in a position to have a car worth less then your payoff. This, in the industry, is called being “UP-Side Down” in the car. Here is a senario I have seen time and time again. You go to a dealer, you think you have such a great deal, you got a loan for (0) down. You have a real low payment for 72 months or (6) years. In two years you have an accident and total the car not even your fault. Could be hit while its parked or even stolen. The insurance company gives you NADA retail for the car. One major problem. The lending company will not turn over ownership to the car to the insurance company untill you pay off the difference on the loan. Many times this difference is thousands of dolllars. Now you have no car and still have a loan to pay. DO NOT GET A EXTENDED TERM LOAN, GET A CHEAPER CAR. Your car payment should not be any more then 1/2 of one weeks NET pay. So if your making 500 a week your payment should not be anymore then about $220 a month. Also your payment should be a minimum of what the car actually depreciates per month plus the loan interest. Most Toyotas, Honda’s and some Nissans depreciate 1.78% of list a month most other foreign cars its 2.25% and american cars are 2.5-2.78% of list a month. So if you buy a $25,000 camery with (0) down your payment should not be less then $500 a month. If you buy a $40,000 Caddy with (0) down the payment should be no less then $1100 a month. If you can’t afford those numbers then you should be buying a cheaper car. Naturally if you put money down then the numbers drop as well. Take the $$ down divide it by the loan term and subtract that number from my monthly payment guidelines. If have further questions on this feel free to contact me direct.

Laura asks…

When purchasing a used car from a dealership, what should come with deal?

What should I make sure comes with the agreement/contract? (I’m financing some) a good rate? How much? Servicing? What kind of warranty? Road-side assistance? What are some of the things I should look out for? How do they put this in writing? I’m getting a Ford Explorer.
Getting the Explorer from the FORD DEALERSHIP.

Administrator answers:

We have invented the internet …. Thous we have good sources to help us research … To look for a good trade-in value and/or for a good price on the new ford explorer, look at these websites for research… ( edmunds.com – kbb.com – vehix.com – craigslist.com ) when you understand what the average numbers are , tell the dealer your opinion … The trick is to know what your talking about ( invoice – blue books – incentives – rebates – special offers, such as financing or leasing ) AND… Your suppose to low ball them to let them know you mean business… All salesman are lazy and will answer any question you will ask them – keep in mind that it doesn’t hurt to ask!

If buying a used car = check carfax … Do not buy any carfax report – every dealership has an account already – take advantage of that…

If financing , check out….. Bankrate.com ….. This website has free calculators to understand what any monthly payment will be at any rate , term and size of loan …. It’s good to compare apples to apples …

Plus , every consumer has the right to check with other lenders before that dealership sends your loan to their banks … Be careful shop around because some dealerships make money in financing…

If you put a lot of money down – no need for gap insurance = pays the loan off to the exact penny if insurance doesn’t at a total loss of car ( stolen – crash total )

About the warranty

If used , ask the dealer to tell you what the recon was = reconditioning costs and reparis to make ready for resale ) the carfax will help you understand when the factory warranty is up … Make sure you know what the coverages are and for how long it is for …. Do not get a certified warranty – If a dealer is offering a certified car ask them to decertify it and get about $1,000 to $1800 knocked off..( depending on model ) which is usually enough to buy atleast a 2 year vs. 24k additional miles service agreement …way more coverage in service agreements ( electrical things …)
Then ask or know what are the deductibles per repair … Every used car service agreements have those … They are similar to insurance policies … If your repair is less then deductible you pay out of pocket … Usuaklly the average deductible per repair is $100 ….

Example … If engine and transmission go bad … You pay $200 … Then you get them fixed …

Make sure you know who is offering the warranty … If buying a ford make sure you can go to the nearest ford dealership for repairs = recommended ….. Don’t get 3rd party = usually through lenders… They suck and take longer to make claims … Make sure you fully understand what parts are used … Example … If engine goes bad … Do they buy you a whole new one … Or rebuild it with cheap parts…

I want to say all service agreements come with towing – trip interuption etc… Benefits come as a standard plus for you check that as well

Good luck
Feel free to ask away!

Susan asks…

How do I know if I can support myself on my current income?

I am thinking of moving out of my parents’ house, and need to figure out if I am able to support myself on my income. Is there a handy worksheet or general tips that anyone knows of? Thanks!

Administrator answers:

Hi,

Your expenses will include:
clothing, apartment rent, telephone bill, cable bill, cell phone, internet, food and water, car payments, car insurance, if you are still in school – your books, monthly payment for student loan, other miscellaneous needed for school, gasoline for your car.

There might some more that I couldn’t think about, but those are just some basic expenses. I don’t know how much you make but the ones i mentioned are not cheap. Not at all.
House or apartment rent is already in a thousand…so think about it, although there are ways to reduce some of the rent – you may get a room mate and so you can devide themonthly payment. If you have 2 room mates – devide it the 3 and everything that you guys will need in the apartment should be devided on how many people will live in the apartment.

If you are making less than a thousand a month, might as well just give that to your mother to help her in the house. Parents are the best roommate ever you know – just do your share in keeping the house. If you don’t have any problem with mom and dad, stay until you get a very high paying job.

Daniel asks…

How much money do you spend(waste) on your car each year?

I spend about
$ 0 on monthly payments
$1000 on insurance
$ 200 on depreciation (12 yr old econobox)
$ 900 on gas (10k Miles/year, 33MPG,$3/gal)
$ 200 on maintance…
for a grand total of $2300 bucks per year.
How much do you spend? Is your car driving you to the poor house?

Administrator answers:

Luckily, my finace fixes cars for a living, so repairs are $0.

I have no car payments, but the insurance is only $400/yr.

Gas is about the same as yours along with depreciation.Owning a vehicle isn’t cheap, but it beats taking the bus, carpooling and hitchhiking!

James asks…

What is better financially… buying an older model car for cash or getting a new car financed?

I was considering buying an older model cash car so I won’t have a car note every month but a co-worker advised that it would be better to get a new car and have a car note because an older one will have monthly repairs that may run more than a car note. I just want to get a few opinions on which is a better option… thanks

Administrator answers:

I hate to be rude but your friend is a moron. The math just doesn’t add up when you compare the long term costs of a good quality used car over a brand new vehicle.

Here’s an example. Let’s say you go out and buy a quality used Honda and you pay $10,000 cash for it. The car is yours. You own it. The only expenses after that initial purchase are for maintenance and repairs. The daily expenses like gas and insurance (which you’ll spend no matter what you drive) are a constant. Even if this car turned out to be a complete POS you’ll probably only spend $800 or $900 two or three times a year to pay for repairs. So $2400 a year for maintenance and repairs. That’s incredibly high even for a POS but let’s keep going. Over a 3 year period you’ll have $10,000 invested in the car and $7200 in maintenance costs for a total cost of ownership of around $17,000-$18,000.

If you buy a brand new car and spend around $18,000 for the car. Relatively cheap in today’s world for a brand new car. But you can find Civics and KIAs and Chevy’s in that price range. Your monthly payment on an $18,000 loan will be around $350 a month. So your out of pocket expenses per year will be $4200 compared to $2400 on the used car. And that is assuming the used car you buy is a piece of crap that breaks down all the time.

The math works out more in your favor if you are lucky enough to get a reliable used car, then your yearly maintenance expenses drop considerably for the used car while those high monthly payments keep coming in for two more years on the new car.

Mandy asks…

2. Do you think promotional pricing helps the marketers gain customers in the case of durable goods?

Do you think promotional pricing helps the marketers gain customers in the case of durable goods like autos, computers, furniture, and the like? Why or why not? Why is it important for consumers to factor in the cost of maintaining these products?

Administrator answers:

Hmmm…I have a feeling that your getting at something else other than what your asking, but I’ll try. Here goes:

The answer for your first question is “Yes!” Sure, promotional pricing does help gain customers, but I feel the quality of of the customer is probably not as good. What I mean by that is that when you gain a customer by having a lower price, you only get price loyalty. Anyone can come into the market with a lower price and steal that customer. That’s why being the lowest priced in almost any market is a bad strategy. In other words, if the best thing you have to say about your product is that its the cheapest, you probably have some pretty huge marketing problems.

Promotional pricing as a whole is probably not a good strategy, and this is just my opinion. I feel like people wait for these sales to come around before making a purchase. And it is so commonplace in the marketplace, take autos for example, that you kinda have to do it, or get left behind. Auto dealers always have their end of year clearance, and if i were buying a new car, I’d wait for that time.

I think giving a reason for promotional pricing other than just a promotion is probably a good idea too. If you’re slashing prices just because of the time of year, that tells your present customers that they got hosed on the price they paid earlier, and could lead to resentment or even loss of a customer.

Perhaps a better strategy would be to use promotional pricing not to gain new customers, but to encourage repeat customers. Getting a special price on a product because you’re a valued customer is more effective than marketing to the masses that your slashing prices because its Mother’s Day.

Your final question puzzles me because it seems kind of obvious. It’s important for consumers to factor in the cost of maintenance so that they will know how much money they have to spend on the product. We’ll take cars for example. If I have a budget of $500/month to spend on a car, I don’t go out and buy a car where my monthly payments on it is $500. I have to factor in my insurance cost, gas cost, maintenance cost, etc. After the fact, I may find that I can only afford a payment of $250-$300 per month. HUGE difference in what kind of car I can afford.

Not only that, it tells the consumer which products to look for. If I had $150 per month to spend on a car, I’m not pulling up to the Mercedes Benz dealership. And I’m using automobiles as a lot of examples, but the example could be made with any durable good.

Joseph asks…

I have a t reg car Ford Escort Estate, can i get the £2000 scrap of a new car?

My T reg Ford Escort Estate 1600cc engine, is really looking tired and i feel i should trade it in for something better. Will i be able to get the £2000 off another car, if i trade it in? How would i go about this? Where could i go? What sort of car would be good for me? I am a single mother with 3 children, so i would need a 5 door, economical for local driving and not too expensive. Can anyone advise me?

Administrator answers:

Yes you can. If I were you id probably go for a peugeot 207 1.1 or 1.4 5 door. With the 2 grand off, you should pick it up for a little over 6 grand, with payments around 150 a month. You’ll save some money on insurance, petrol, mantainance and MOT and stuff so this will help offset the monthly payment.

Better do it before janurary too, as the govt are reversing the VAT reduction.

Other alternatives are

Skoda (great cars these days, and very cheap, about £9000 for a new Octavia
Toyota Yaris
Vauxhall Corsa

which all have good cheap five door models.

Just head down you local dealer and they will fix you up. Id also get a copy of the autotrader before you go, as they list “target prices” for all models. That way you can tell if the dealer is trying to rip you off. Sorry to say this and sound sexist, but you should take a male friend, because a clueless woman is pay dirt to salesmen (im genuinely not trying to be smart or ignorant saying that)

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