Cheap Monthly Car Insurance

Questions and Answers

Your Questions About Cheap Monthly Car Insurance Payments

August 22, 2013

Mandy asks…

Ok, I know this is dumb question but what excatly are car payments?

I’m 17 and preparing myself for college soon and being on my own and all that good stuff. Anyways, exactly what are car payments and how do you pay for them?

Administrator answers:

A car payment is when you take the price of the car (the total price), and spread that amount over a number of months that you and the person/dealer you bought the car from agree on. People do this because they cannot afford to pay for the car upfront.

Usually, a car payment will include interest. Interest is a percentage (%) that is applied to your month payment. Example your car cost $10,000 and you agreed pay pay $1,000 down. The financed price of the car (the amount you are going to pay over several months) is now $9,000. You and the dealer agree that you will pay the $9,000 over 3 years (12 months in a year, therefore 36 months). Divide $9,000 by 36 months, and your monthly payment is $250 per month.

Here is the interest. The dealer says, since we are not getting this money upfront you need to pay a certain amount of interest to ensure we (the dealer) are not losing money. Let’s say interest is 5%. $250 times 5% equals $12.50. Your total monthly payment is now $262.50. Multiply that by 36 months, and you would pay a total of $9,450. This is ONE of the ways they make money off you (this is always a very watered down example).

Buy cheap used car for cash if you can. Do not forget about insurance costs, fuel costs, and maintenance costs as well. Hope that helps!

Steven asks…

How do I get rid of my car?

A year ago I purchased a car from Eastern Motors. They would not sell me the car I wanted because they said the card did not hold value and I would be in backwards because I owed on the car I was getting rid of. They talked me into getting a 2005 Mercedes. This has been a nightmare. The car note is killing me and it seems that there is something always wrong with the car. My credit is the pits and the car note is making it worse. How on this earth can I get out of this mess?

Administrator answers:

You are probably going to be sucking for the next few years, but I’ll tell you the BEST thing to do. Trade that car in for something that’s easily insured, great on gas and cheap as hell. Go from your very nice Mercedes, to a Toyota Yaris or something similar. Your monthly payment will be a ton lower, insurance will go down, monthly gas expenditure will decrease and that extra money should go towards the loan. When you get to the point where you’re not too bad off (pay the loan down some) you can trade it back in for what you want, but that’ll be like 18months or more down the road. I was in the same situation. I bought a brand new car that I couldn’t afford, traded it in for a corolla, then after I got back on track I went and got me a real nice car that I can actually afford!!!

Donna asks…

Should I buy a car I can afford straight out or take out a loan?

I’m a 21 year old college student with a small amount of credit. No missed payments but only about a year worth of credit history. Plus whatever deferred student loans count as. Although it varies I make between $700-$1,000 a month from my part time job, but I also have $200/month of bills plus whatever food/other expenses.
With help from my parents, I have about $4,000 for a car. Now my question is should I take that money and buy some pre-2000 but decent car for maybe 2k-4k, or should I go for something a little newer at 7k-9k.
I would try to go through my bank for a car loan, using the car itself as collateral. The minimum loan amount I could take out would be 7.5k going through BOA, and I’m thinking my interest rate would be something like 6%-9%. Looking at monthly payments of around $130. After 5 years, this would ad up to like $2,000 paid in interest, which really isn’t that bad.
Another question I have is, if I were to take out a 9k auto loan, could I immediately put a 4k payment into it, or would that not work or have some hidden fees?

And yes, I do know I have to pay for gas/insurance/repairs/etc but at the two price ranges I’m looking at, I don’t think those variables would be to much different. If anything the newer car should be cheaper in repairs & gas.

Administrator answers:

I always prefer to buy out if I can off the get go. Especially if I don’t need the car for long. Getting a car loan to get a newer car isn’t too bad either as the car will last longer. If its a car you’ll be keeping for a while then I would get a newer one with a loan. It will be more reliable.
Each contract is different and varies on the bank. I got a loan of 17000 on an 8/7 year term, meaning I can pay it off sooner if I like. I asked specifically if I can make lump sum payments and I can. Just ask a lot of questions before hand

Lisa asks…

Why do so many people complain of being paid low wages?

They work in factories or in the construction, or cleaning, doing some menial and insignificant work, and they still ask to be paid like a doctor?

Time to understand that the role of the majority is to serve the minority, be paid accordingly, and still be thankful for that.

Thanks for your answer.

Administrator answers:

I would like to quote whomever said this
(To work for 40 or more hours a week and not be able to buy the necessities of life? Not that they should be paid Doctor wages, but a living wage is only fair. If “role of the majority is to serve the minority” then slavery is justified according to that attitude. Laid off in 2004 and only finding part time work since then I do not have the following:
1) Cable tv and DSL (just antenna t.v.)
2) Fancy cell phone (iPhone, etc.) (never owned one)
3) $25,000+ car (2003 Toyota Echo)
4) vacation trip every year (Not since 1992)
I also have no Health Insurance Coverage. I go to food banks to get food and am on the verge of losing my home to foreclosure.)

this is why we need higher wages. Consider also these bills
car payment 340/per month
car insurance 157/monthly ( cheapest we could get)
groceries/diapers/wipes around 200 every 2 weeks
phone/internet 167 monthly
all this and we only make around 1400 after taxes/rent/utilities, and my husband is in the military, not saying he should get paid higher but it’s hard on us with his pay so i can just imagine living with us working a min. Wage job.
I worked at toysrus for 7 bucks an hour on 40 hour weeks and after tax only made 270 bucks every two weeks, sorry but times that by 2 a month and there is no way people can live on that. Especially people with children.

Linda asks…

What is the best type of car to get for cheaper insurance?

Administrator answers:

The best “type” of car will most of the time be to be a compact or economical car. I would be more concerned about buying a car that is safe and reliable and doesn’t have an unreasonable monthly payment. The insurance premium should be less of a concern because there are always ways to get a lower premium.

If you are rate-conscious on your insurance premium there are few things you can do to lower your payments. 1)get lower liability limits for property damage and bodily injury. Some people go with the state minimum. (I don’t recommend this if you have a history of at-fault accidents. It’s a smart idea, though it’ll cost a tad bit more, to carry high liability limits. 2) get a higher comprehensive and collision deductible. (Most people, depending on the state you live in, go with a $500 deductible. 3) Take a defensive drivers course and submit the passing results to your carrier. If they offer a discount they will apply when they receive your class results. 4) Have your payments automatically drafted from your checking account. (Most insurance companies will save you $3-$4 a month. Not a lot, but every little bit helps. 5) Ask your insurance company what other savings you are eligible for. You never know until you ask. Also, if you use your car for business use, expect a higher premium.

If you must know a specific car, I would recommend a small basic ecconomical car with basic equipment. (Some insurance companies give you discounts for safety features on the car, like an alarm system, air bags, abs brakes ect…) There is a lot of stuff involved in determining a rate, but I’ve found that it’s mostly the small four-door, 4 cylinder cars that usually cost less to insure. But there’s more to it than the car itself that determines the rate. Visit progressive.com because it is very comprehensive and you will learn all the basics you know about auto insurance.

Nancy asks…

What are the pros & cons of leasing a vehicle?

I know you will never own the vehicle when it is leased, but what are other pros & cons? Most people trade vehicles within some years anyway. I appreciate any suggestions or thoughts. Thanks!

Administrator answers:

Pros:
- New car every 2-4 years with latest features and safety equipment
- Lower monthly payments – lower short term cost
- Car is always under warranty
- No trade-in/used car selling problems
- Lower sales tax (in most states)
- GAP insurance automatically included

Cons:
- Limited to average number of miles (about 15K per year)
- Must keep car in good condition and repair damages
- Lease-end charges if excessive miles or damages
- People with flawed credit may have to make a security deposit
- Insurance cost can be higher
- With lower payments, you build no owership equity
- Higher long-term finance costs
- Not easy or cheap to end lease early

Helen asks…

What do you do when the debts have gotten too high?

I am awash in debt.

I had someone close to me who was having financial problems and I stepped in to help them. My helping out ended up becoming a pattern for them. Here I am now, overwhelmed and I do not know what to do to get myself out of this mess.
As an FYI… I helped out someone I was dating, who was going through a messy divorce.

Administrator answers:

Did you help them by loaning them money? If so and you can’t afford it, you need to have them repay you.

If you gave them the money you have no choice but to reduce your expenses as much as possible. Reduce the ‘extras’ you pay for like cable TV options, telephone service options, grocery choices, cell phone options, etc. Cut or eliminate your long distance charges and texting charges. When you grocery shop try to only buy what you need and what’s on sale.

Stop eating out or drinking at bars. Shop around for better insurance rates. Reduce how much you spend on clothing. Take the bus more often and leave your car at home.

Pay off all your credit cards as the interest rates are very high. Consolidate your loans for a cheaper rate and a single monthly payment which is easier to keep track of.

Do a budget and see where your money really goes. Decide what you can really afford and don’t overspend.

Carol asks…

What are common expenses for teens just moving out?

I’m moving out when I’m 18, and I would like to know expenses for that. Like bills, stuff I need, house up-keep, food, home payments,etc.
Basically how much it would cost!
Thank you(:

Administrator answers:

That is a hard question to answer because the price of renting an apartment or house varies by city. I will break it down for you as it is in my city monthly bill: 1. Rent $500 or higher, but you can off-set the cost with getting a friend to go halves on rent. 2. Electricity $200, can be much lower if you turn all those extra lights off and install those extremely low wattage energy savings light bulbs. 3. Water/Sewage $50, could be more because my city has cheap priced water but base sewage bill off it ( sewage is 3.5 times more then water.) 4. Washing clothes for the month requires $20 in quarters to use laundry mat and that’s not counting costs for detergent/bleach/fabric softener. 5. StartUp Costs for a vacuum cleaner/broom/mop/Mr. Clean etc. Initial cost of $250. 6. Food is expensive and prices are climbing with gas prices soaring $160, and it could be much higher if eating fast-food or expensive coffee. 7. StartUp Costs for furniture, coffee maker, sheets, pillow/pillow case, blanket or a bed $1000 but could be much much less if you get great looking stuff from Goodwill or Salvation Army. 8. Transportation Costs: Gas, Insurance, Maintenance, repairs, and paying the monthly note for your car 300/month or more because car insurance is highest for your young age. 9. There are lots of other costs from renter insurance to your personal medical insurance. $100/month.
If it were me I would buy RV and rent a lot at the camp ground it would really lower many of your monthly bills. Living on you own is hard and remember to not sign a lease on anything as you probably are aware that jobs are unsteady so if you can’t pay the bills then you could find yourself in court for non bill payment. I hope I open your eyes a little and didn’t scare you with all the costs, I can see your mighty smart because your already asking grown up questions. Good Luck

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