Advertising
Advertising

Things to Remember When Shopping for Car Insurance

Things to Remember When Shopping for Car Insurance

Like your real neighbor, State Farm is there to make money. All those shiny geckos, cavemen, jokes, and jingles are in your head because Warren Buffet’s Geico pays a LOT of their hard-earned money to put them there. When you buy a car, the law requires certain levels of insurance, and, depending on who, how, when, what, and where you are, you will pay different amounts for this insurance. It’s all so confusing and annoying–can’t we just pay someone to figure that out for us?

You actually do, and that’s all rolled into the price of your insurance (along with marketing money, operations, etc). A lot goes into determining your insurance premium, and, lucky for you, I spent the majority of my 20s working in at insurance tracking company, and I’m happy to teach you all the ins and outs they don’t want you to know behind the curtains of Oz. Here are a few things to remember when shopping for car insurance.

Advertising

We all live in a yellow submarine. A yellow submarine? A yellow submarine...

    We all live in a yellow submarine. A yellow submarine? A yellow submarine…

    If You Have a Loan, You Need Insurance

    Anytime you take out a collateral loan (house, car, RV, boat, motorcycle, etc), you have to buy insurance on it. It’s called Collateral Protection Insurance, and it’s not much different than a store or phone warranty. If you don’t voluntarily purchase insurance, you’ll be saddled with the bank’s inflated Force-Placed Insurance. Assurant (a company also owned by Warren Buffet) ironically has subsidiaries that underwrite both Force-Placed Insurance and cell phone insurance (which is why you’ve never heard of them, despite probably paying money to them).

    Liability insurance is usually standard (meaning the accident’s your fault) for any vehicle. If you don’t own the vehicle, the banks will require certain levels of collateral and collision insurance. Some states are beginning to pull this market-share from the banks, so who’s forcing you to pay varies by state, but you’re paying it either way.

    Advertising

    Force-Placed Insurance Ruins Lives

    While we’re speaking of the dark underbelly of insurance, it’s important to know that the high price of force-placed insurance is largely responsible for the majority of repossessions and foreclosures nationwide. Basically what happens when you run into financial trouble is you stop paying on your insurance to keep up your rent/mortgage/car/utility/food payments.

    When you avoid that $100-$1000 bill, your bank punishes you by backdating a more expensive policy (4-10x more expensive), and forcing you to prepay the next year’s premium as well. In addition, an analysis will be performed on your loan, and your car or mortgage payments will double or triple. That’s all it takes to push many honest and hardworking people to lose their home and their car within a year. Even if you recover, it’ll take years, as your credit will be ruined, and it’ll take more and more money to get back above water.

    Avoid all of this by keeping up on your insurance, and, when the banks erroneously accuse you of not having insurance, just because you were price-shopping online and the insurance company mailed them a letter to let them know, be vigilant and stern in correcting their mistake immediately. Hold them accountable. Speaking of which—

    Advertising

    Insurance Agents Are Everywhere–Price Shop

    There’s no reason not to price shop. If you’ve ever travelled on an airline, you know you can use aggregate services like Priceline or Hotwire to get basic prices, but the best deals are always on the airline’s actual site. This works the same way in insurance—no matter how honest a company seems, they really want you to use their service. They may sometimes show a competitor is cheaper, but they’re there to make money as well, and you’re not a part of their family. The very least you can do for yourself is check every company’s website, no matter how many times you’re forced to enter all your info again.

    You May Already Have Insurance

    A lot of insurance companies, such as Erie, Traveler’s, Lloyd’s of London, etc. offer umbrella policies, which can cover your home, vehicles, recreational vehicles, and more. When looking for insurance, check with the company you already have. It doesn’t even have to be a full umbrella policy, car insurance sometimes covers the driver, so you can drive other cars you don’t own without paying extra. Some provide car rentals in case of an accident and/or cover damage to the rental car itself. See what you have before you buy more.

    Advertising

    Whenever you don't trust a cop, take a picture...

      Whenever you don’t trust a cop, take a picture…

      Extreme Couponing

      Every insurance company has discounts that can be obtained in different ways. Remember your agent is just a sales person. No matter how local they seem, their policies are underwritten by someone bigger than they are, who in turn is underwritten by someone bigger until you get to one of the big guys. If you’re not insured by that structure, you’re borrowing from a legitimate loan shark/bookie/drug dealer, and you’ll probably be brutally killed for not making your payments.

      Because they’re salespeople, agents offer discounts for good grades, reaching a certain age, being born a certain sex, and things like that. They’re not offering these discounts—a billion dollar research project analyzed consumer data and determined how much to charge you to make as much profit as possible while still undercutting the competition. The real deals your agent is offering you are discounts for watching a video, taking a class, or some other menial task—they do that because they’re good sales people, and know it’s subsidized by the government to make the streets safer. Since the government is run by taxes, ultimately, you’re always footing the bill.

      It’s About Who You Know

      If you work in the government, you can get a great deal with USAA. Like credit unions, many insurance companies started as coops. Even Geico stands for Government Employees Insurance Company. By the time you heard of them, they were already huge. That’s the thing about insurance companies—despite what you think from their public face, they hide in the shadows making money. If you’re a teacher, work for a non-profit or tech firm, you may be able to obtain cheap insurance from your occupation. Look into it.

      Long-time customers are valued in any business, so whoever you do pick to insure your car, stick with them as long as you can. They may experience ups and downs, but they’ll appreciate you sticking with them in the long run, and you’ll often be surprised at how much local agents will go out of their way to help long-term customers. Don’t shop for insurance by the flashy ads or from whoever’s offering the best deal up front. Look into their track record, check to see if loss ratios are in line with the competition. Ask friends and family how their company and agency treats them. With a little elbow grease, you can find the right car insurance for you.

      More by this author

      7 Ways To Make Exercise Fun For Everyone Say Goodbye to a Skinny Body: How to Gain Weight Fast 24 Easy Ways To Make Money On The Internet What 500 Calories Really Looks Like in Different Foods 20 Awesome Screensavers that Make your Desktop Delightful

      Trending in Money

      1 How To Pay Off Credit Card Debt Fast: 7 Powerful Tips 2 How To Make a Million Dollars in 7 Steps 3 7 Cheap but Powerful Products That Can Help Your Waste Less Food and Save Money 4 How To Retire Early (And What To Consider Before You Do) 5 How To Create a Budget (The Complete Beginners’ Guide)

      Read Next

      Advertising
      Advertising
      Advertising

      Published on January 8, 2021

      How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

      How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

      Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

      The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

      Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

      What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

      Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

      1. Pay More Than the Minimum Credit Card Payments

      Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

      Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

      Advertising

      You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

      The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

      2. Start With High-Interest Credit Card Debt

      If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

      First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

      At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

      3. Revisit Your Budget

      Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

      You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

      Advertising

      Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

      If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

      4. Avoid Using Your Credit Cards

      Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

      The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

      It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

      5. Start a Side Hustle to Boost Your Income

      You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

      If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

      Advertising

      Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

      It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

      6. Sell Your Used Items for Extra Cash

      Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

      A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

      Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

      When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

      7. Know When to Seek Help With Your Debt

      Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

      Advertising

      There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

      In extreme cases, the debt solution can be:

      • Debt relief – where your debt is partially or wholly forgiven
      • Debt consolidation – taking out one loan to repay others
      • Debt settlement – the creditor forgives a significant portion of your debt
      • Bankruptcy – legal process for seeking relief from some or all your debts

      It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

      Wrapping It Up

      Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

      So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

      More Tips on How to Pay Off Debt

      Featured photo credit: rupixen.com via unsplash.com

      Reference

      Read Next