Automobiles Archives - Smart On Money

What Sort Of Liability Coverage Do You Have On Your Rental Car?

When I travel, I try to avoid actually renting a car. I either road trip it, or I try to stay somewhere near public transportation. However, there have been times when renting a car has been the best option. When you do rent a car, though, you need to be careful of the liability coverage involved.

If you get in an accident, you will be responsible for damage you cause to the rental vehicle, to other property, and perhaps even to injuries you cause to others. Before you rent a car, make sure you have the liability insurance coverage that you need. Here are some things take into consideration:

Coverage Offered by the Rental Car Company

Rental Car Insurance Coverage In some cases, the rental car company offers auto insurance on the cars. Some companies, like the Hertz on Demand program, offer free liability coverage. However, it's important to realize that this doesn't mean you have the coverage you need. Many free liability program only offer the state minimum on liability coverage. So, you might only be covered for a relatively small amount, like $25,000 or $50,000.

Of course, you could also pay the fee for extra coverage on the rental car. Most rental companies will sell you coverage for a flat daily rate. However, it can get a bit pricey in some cases. You'll want to see what others offer before you decide to take the rental company's liability coverage.

Rental Car Insurance from Your Credit Card

Many people don't realize that their credit cards might actually come with rental car insurance coverage. A number of credit cards offer free liability coverage for rental cars. This can be a real help for you when it comes to making sure you are protected when you drive a rental car. Once again, you need to double check the coverage limits. You are likely, though, to receive good coverage.

In order to make sure that your coverage is activated, you will need to pay the rental fee with the credit card in question. Additionally, you will need to sign the insurance waiver offered by the rental car company. When you don't get coverage through the rental company, you need to sign a document indicating that you are declining the rental car company's coverage.

Your Current Insurance Policy

You might already have rental car liability coverage through your current auto policy, and not even realize it. Contact your insurer to find out what the limits are, as well as the terms for coverage. You can also find out about an umbrella policy that can help shield you from liability issues associated with your rental car experience.

It's also possible to get what is known as a nonowner liability policy. This can allow you to have insurance when you rent a car. Check the rates for the level of coverage you want. If you frequently rent cars, it might be more cost efficient to get this separate coverage.

Review your options, as well as how often you use rental cars. You want to be able to get the best coverage for your money, and ensure that you have enough coverage to pay for issues that arise if you get in a wreck with your rental car.

Do You Save Your Pocket Change? For One Indiana Man It Adds Up To A New Car Every 10-15 Years.

By Mr. Money 8 Comments

Whenever I take out cash and pay for things at the store inevitably I end up with a pocket full of change at the end of the day. Quite often I'll just spend the change in the vending machine at work, or leave it in my car for times when i need 25 cents here or a nickel there. More often, however, I'll take the change home with me and put it in the change bowl on my dresser, and every few months I'll take it in and have it deposited in my bank account. Usually it adds up to a hundred dollars or more, which goes directly into my savings.

The question, however, is this. What if you were always paying in cash, and every time you got change it went directly into your change jar? How much money would it add up to, and how much could you save in change alone?

save spare change

Saving Spare Change To Buy A New Car

For most of us who don't religiously save our change the coins in our jars adds up to enough to buy a nice dinner or a couple of video games. But for one Indiana man who was a self-proclaimed penny pincher, the coins added up to be enough to buy a new truck!

Paul Brant considers himself a penny pincher, but his savings in quarters and dollar coins really paid off.

Brant, 70, used more than $25,000 in change to help buy a new Dodge Ram half-ton pickup truck Friday — 13 years after buying another truck with spare change.

Brant has been storing his change for years, and estimated he had about $26,000 in coins for Friday's purchase. In 1994, he bought a Dodge pickup and a Dodge Neon using about $36,000 in quarters.“As long as you don't put your hands back in the till, it really adds up,” he said. Brant stored his change in coffee cans, water jugs and piggy banks over the years, and was escorted by sheriff's deputies as he brought the rolled coins to the dealership.

He's not the only person to be doing things like this, there have been others over the years, all over the world. A businessman in China did something similar in 2010 to buy a van.

Mr Zhao, a businessman, dropped bundles of notes, none worth more than one yuan – about $0.15 – at the dealership in Jining, in northern Shandong province.

Extra staff had to be brought in to work shifts to count it all, a clerk at the dealership said. Finding a dealership to accept the notes, many of them stained and torn, was not easy, he said.

“I held onto the money waiting to see if they would accept it so that I could buy the car. The manager of this dealership decided to accept my cash, so that was really helpful to me,” he said.

After hours of counting, the staff at the dealership confirmed he had provided exact change.

What If That Money Had Been Invested Instead?

It's fun to think about how small amounts of change saved up over the years can add up to large totals. It's truly inspirational. But what if the money wasn't just saved in jars, but instead was invested? How much could it have been?

Let's take the first story for example. If you invested $26,000 over 13 years (how long it took him to save it up) with an average rate of return of 8% you would have almost $42,469 after 13 years. That's a difference of $16,469 by investing your money instead of just allowing it to sit in jars! That's enough to buy another nice used car!

Now realize that he has done this twice now, the first time he saved up $36,000. If he saved at the same rate it probably took him around 18 years the first time – so if he had invested that money at 8% returns he would have garnered almost $71,245 instead of $36,000. That's the power of compound interest!

So next time Mr. Brant, I recommend investing your change by depositing it every few months in a nice index fund!

Have you saved your pocket change and used it to buy something? Tell us your story in the comments.

4 Crucial Tips To Help You Save For Your Next Car Purchase

By Contributor 12 Comments

Buying a new car requires planning and forethought. I am against leases and “zero-down” offers; these teaser promotions offer no benefit to you, but plenty of benefits for the dealerships. Dealers add an astounding amount of interest payable over the life of the car loan, mitigating any savings from an introductory promotion.

Instead of financing a new car purchase, you can save your money, and buy a car with cash. Here are four important tips to help you save for your new car purchase:

save up for your next car

1. Don't Buy a New Car When You Pay Off Your Current Auto Loan

Many people seem conditioned to believe that as soon as they pay off one auto loan, they need to buy a new car. This kind of thinking leads to unnecessary debt, and it's why so many people end up with an upside down car loan.

I reached the age of 35 before I experienced life without a car payment – a dream come true. Once I stopped writing a monthly check for $300, I started building my savings. Today, I am still driving the car that I paid off eleven years ago, and I can pay for my next car with cash. You too can significantly improve your financial situation, and save for your next car purchase by saving $300 each month.

2. Continue to Make Your Car Payment

Even after I paid off my car, I kept the mindset that I still had to make the $300 monthly car payment. I placed the $300 surplus into an investment account, earning 4% interest. The total return on my monthly deposit, which I made for seven years, was substantial.

It takes a great deal of discipline to take “found money” and place it into a savings or investment account. When I have additional money available after paying off any type of loan, I don't think of the money as “found” or “extra” income. Instead, I continue to pay all or a portion of the monthly loan payments into a savings or investment account, to save for big purchases, and for my future.

For this to work, you have to begin depositing the loan amounts into a savings account immediately after paying off a loan. Otherwise, the money will get swallowed up by your other expenses. One month before you pay off the loan, set up the savings or investment account. When you make the final loan payment, set up an automatic transfer for the monthly loan amount. This “payment” should go from your checking account directly into your savings or investment account each month. This way, you can continue to budget around the monthly debit, and save money, without risking the reallocation of the funds.

3. Research Before Buying a New Car

Once you can afford to buy a new car, begin researching your purchase. You can do most of your research online before you visit any car lots. Seriously consider whether you really want or need a brand new car, and review options for used cars.

Contact dealers via the Internet to ask questions and to eliminate some trips to dealerships. You should know the exact make and model of the car you want to buy before visiting any dealerships. Research dealership pricing online to have a base idea for the sale price of the car you want to buy. Lastly, consider actually buying a car online. You can buy cars from eBay Motors, and many dealerships have Internet sales managers. You can often negotiate a better price online, and when you complete the online deal, you can pick up your car.

Also consider buying a used car from an individual instead of buying from a dealership. The dealerships inflate prices, so you can often find a better deal when you buy directly from a person. If you have reservations about buying a used car, buy a model that is still under manufacturer's warranty and have a trusted mechanic check out the car for any potential problems or issues.

4. Make Short-Term Sacrifices

Make short-term sacrifices to save for a big purchase. For example, I love going to baseball games. Buying tickets for a ballgame, paying to park, and purchasing refreshments can cost over $100. When I commit to saving for any major purchase, I forgo baseball games for six months, or until I reach my goal.

However, if I wanted to save $5,000 to buy a car, I would have to do more than just give up baseball for a season. What could I do to save $5,000 in twelve months?

Stop going to baseball games for one season, for a total savings of $500.
Stop buying new clothes for one year, a savings of $50 a month, for a total savings of $600.
Reduce my satellite TV package by $20 per month for 12 months, for a total savings of $240.
Downgrade my current Internet service for six months, for a total savings of $240.
Continue to make my monthly $300 “car payment” after paying off the loan for my current vehicle, for a total savings of $3,600.

If I continue to make my $300 “car payment” for one year, stop going to baseball games, stop buying new clothes, and cut back on my satellite TV and Internet services, I could save up to $5,180 by the end of the year, plus interest. Remember, short-term sacrifices don't have to be permanent. Keep your end goal in mind, and focus on the benefits of saving while you try to save for a new car.

Final Thoughts

I paid my car off eleven years ago. If my car dies tomorrow, I can easily replace it with my savings. I planned carefully, saved money through various means, and made short-term sacrifices. Now, I am in a position to buy a new car with cash.

By utilizing some of these tips, you can save enough money to buy a new car. What other ideas do you have to add to your car fund?

David Bakke writes about his life and money topics on Money Crashers, a personal finance blog focused on helping readers better manage their money and grow wealthy.

How We Paid Cash For Our New Car

By Mr. Money 3 Comments

Over the past 3 weeks my wife and I have been searching for a new car. We hadn't originally been in a hurry to buy a new car, but an opportunity presented itself where we could sell our current car, a 9 year old Honda Civic, at a decent price to a family member. The family member had purchased a Toyota Camry 20 years ago, and it had finally quit on him and was going to be more to repair than it was worth. He decided to cut his losses, save the money and look for a quality car that would last him another 10-15 years. He thought our car fit the bill since he knew we treated our cars well, it still has relatively low mileage, and Honda is known for their reliability.

Since he needed the car within a week or two, we had to start looking immediately. Thankfully because we pay ourselves a car payment even when we have paid off cars, we had the cash in the bank to be able to go and buy a new car on short notice – without having to get paid for our car first, get approved for a loan at a bank, or financing at the dealership.

Paying cash for cars

Paying Cash For Your Car: Not Normal?

We know that not many people nowadays actually do what we do – paying cash for their cars. Paying for a car is one of the most expensive things most people will buy, right behind buying a house. If you don't plan ahead far in advance, you won't be able to do it, and financing a car will be in your future. Who can pay $10,00-25,000 for a vehicle without planning ahead? Not many people make enough money to do that.

Saving up and paying cash for your cars, while it may not be normal – is a good idea. After you've done it a few times you'll have enough cash saved in order to buy a nice 2-3 year old used car every 5-10 years, while never paying thousands in interest again.

Car Payments – A Fact Of Life?

Most people just assume that having a car payment is a fact of life. After all, cars are expensive, and most people just don't have thousands of dollars laying around. So what is the average car payment? Dave Ramsey's site recently told us what one study found:

Recent statistics show that one-third of car buyers sign up for a six-year loan at an average interest rate of 9.6%. Among these buyers, the average price of the car is just over $26,000. This means that one-third of the cars you see on the road are dragging a $475 payment behind them.

So 1/3 of car buyers have an average of a $475 car payment over six years at 9.6%. That means they'll end up paying nearly $33,000 for a car that retails for about $26,000. On top of that, the car will only be worth on average about $6,000. That's quite the loss! So why not make car buying more affordable, while at the same time freeing up more money for saving and investing?

Buy A Cheap Car. Work Your Way Up.

So how do you get started paying cash for a car? For me it meant that my first car was a bit of a beater. My first car was a 1986 Chevrolet Caprice Classic station wagon with 140,000 miles on it. I saved up the money from a high school job and paid $1500 in cash for it. It had cigarette burns in the upholstery, and was a gas guzzler, but it was paid for in cash. That car lasted me a few years during which time I still saved up money for my next car (which would hopefully be a bit nicer).

When the old Caprice died, I ended up buying a slightly more expensive $6000 1996 Dodge Intrepid with 70,000 miles on it. That car lasted me another 5 years. When it started having engine problems I traded the vehicle in for a couple thousand, and used that money and the payments i had continued saving in the meantime to buy my next car, a 2001 Chevrolet Lumina. I paid $7000 in cash. That car lasted 7 years, at which time we paid cash for my current 2006 Chevrolet Impala. We got the money from my old trade, plus the payments we had saved to buy it for $10,995.

So as you can see I've been saving up and paying cash for cars for the last 15 years or so, and never have I paid interest on any of those cars. Each time we buy a car we purchase one that is a bit newer, and in a bit better shape. That means the car lasts us longer and we're able to save up more for the next car. My current car has been with me for only 3 years, and I'll probably keep it for at least another 5-6 years at least. I've got a number in mind of how much I'll want to spend then. So in the meantime I'll continue paying myself a car payment until i reach that number. At that time I'll take that money and start investing it for our future!

My wife has followed a similar process, starting out with an older used Honda over a decade ago, and working her way up to our current 2009 Honda CRV which we purchased last week.

Paying Yourself For Your Next Car, Not The Bank

So the essence of how this whole process works is this:

Buy a beater: Save up and pay cash for an affordable and reliable “beater” that should get you by for a couple of years at least. Don't forget to save up an emergency fund to cover any auto repairs that may come up.
Pay yourself a payment: Pay yourself a car payment instead of the bank now that you have a paid off car. Use that money to pay cash for your next car. This car could be a bit nicer and more reliable since you'll be able to sell your old beater for at least some return, plus you'll have they money you've saved.
Wash, rinse, repeat: Save up and pay cash every time you buy a new car. Every time you do buy a car you'll most likely be able to buy a nicer car as you've had longer to save, and more money to spend. The newer and more reliable the car, the longer you can own it – and the more you can save for your next car.
Invest the difference: Take the money you've saved on interest payments and invest it!

Of course this scenario is going to be different if you're one of those people that prefers to have a new car every few years. for a slightly different take on the subject, and how you can upgrade your vehicle twice in 20 months – check out Dave Ramsey's post on the topic.

The Truth About Car Payments

Have you ever paid cash for a car, or are you considering doing it now? If not, what has kept you from doing it?

Buying A Used Car? Watch Out For Flood Damage

By Miranda Marquit 3 Comments

One of the ways you can save money when you purchase a car is to buy it used. Used cars can provide you with a great way to get from here to there — without breaking the bank. Plus, you avoid the instant depreciation that comes the moment you drive a new car off the lot.

You still need to be careful, though. Thanks to the high water in many parts of the country during the spring or hurricane season, there has been an increase in the number of used cars on the market that have been damaged by flooding.

Car With Flood Damage

Why You Don't Want A Car With Flood Damage

Before you buy a car, you need to understand that there are a number of problems that can come with flood damage to a car. When that much water infiltrates anything — especially if it sits — there can be very real problems. Some of the issues that comes with flooding include:

Mold and mildew: So much moisture can lead to mold and mildew in the car. This can ruin carpeting in your car, as well as smell nasty. Mold and mildew can also trigger allergies in some people, making it very unpleasant to be in your car, and further destroying what's left of the car's value.
Electrical problems: All that water in the car can damage electrical systems. This means that you could end up with shorts in the system, or components not working right. You might buy the car, only to find that it needs expensive repairs on the electrical system.
Body damage: Peeling paint can result from flood damage, but one of the real issues is rust. Flood damage can accelerate the rate at which the car rusts, and that can lead to expensive structural problems.

Sometimes, flood damage isn't obvious, though. Many sellers try to cover it up with new paint, and with other gimmicks. If you just give the car a once-over, you might not realize that the car has been in a flood.

Avoid Buying A Flood Damaged Car

Most states have laws that require that title documents reflect flood damage, or mention that a car has been through a flood. However, this doesn't protect you in instances when the state doesn't have such a law — or if someone flouts the law. You can check a Carfax report to see about flooding (most reputable dealers will provide you with a free Carfax), but sometimes the flooding happened too recently, or some method was used to avoid having the information reflected on Carfax. You can also get a free report at www.nicb.org, the site of the National Insurance Crime Bureau. Always inspect the title of the car, and ask for the former owner's contact information if you are buying from a dealer.

As you look over the car, check carefully for signs of possible water damage. You should also have your used car inspected by a mechanic you trust. This typically won't cost very much, and it can provide peace of mind as you buy the car. Plus, a good mechanic will be able to spot the tell-tale signs of flood damage — and attempts to cover it up.

How To Find The Cheapest Gas In Your Area

By Mr. Money 12 Comments

If you've been watching the news lately, you know that gas prices have been on the rise, and that we could soon be seeing $4 (or even higher) per gallon gasoline. With unrest in the middle east, government collapse in Libya, and our government not allowing us to drill, who knows how high the gas prices could go before we're done.

So while you probably can't stop using gas and just stay at home every day, you can do what you can to minimize how much you're paying for your gas when you do fill up. To help in that goal, today I thought I'd throw out a few of my favorite gas prices websites that will help you to find the cheapest gas near where you live.

Find The Lowest Price On Gas Near You

While it's probably not a good idea to drive 20 miles out of your way to find gas for 5 cents cheaper, it probably IS a good idea to find the cheapest gas in your immediate area. Prices can often vary from 5-20 cents per gallon! To help in that aim here are some useful sites that I've found.

Gas Price Websites

GasBuddy.com: GasBuddy.com is probably my favorite gas prices tool. Gas prices are submitted by users in the local area along with the time/date they saw the price. I’ve found it to be pretty accurate, and they have a variety of other tools available as well like a gas price heat map, fuel logbook.
Automotive.com Gas Price Tool: To use the tool just type in your zip code and it will come back with the local gas prices in your area. Easy as pie! The site also has an assortment of gas prices widgets that you can place on your desktop, website, blog, facebook account or google homepage. Very cool!
MSN Autos Gas Prices: MSN Autos has a gas prices tool as well. Similar to the ones above, but not always as up to date.
Mapquest Gas Prices: Yet another gas price tool, this time from Mapquest.

There are sites to find your gas prices, but those are the ones I found most helpful. Have your own? Leave a comment below!

Gas Price Apps

Local Gas Prices: App that shows a list of the gas stations nearby, and allows you to sort the list according to price or location. Tap on one of the gas stations, and it opens Maps, showing you that station and your current location.
Cheap Gas: Gives you a list of stations, sorted in order of the lowest price. Tap on a station listing, and it opens Google Maps.
Gas Buddy: My favorite app, from the same folks as the website above, gives you a choice of a list or a map of gas stations. You can configure it to list the stations in order of how close they are to you, or by price, and you can sort the stations by fuel grade, including diesel. This app is also available for Android and Windows 7 smartphones.

Other Ways To Save On Gas

While you're trying to save on how much you pay for gas, here are a few other ways you can save.

Buy gas at a warehouse club: Another easy way for some people to save gas is by buying their gas at their local warehouse club (Sam’s Club, Costco, etc). Many of these membership shopping clubs have gas as well, usually 4-5 cents cheaper than everywhere else. Granted, you usually have to be a member to take advantage of their prices, but if you are, buy your gas there. When searching for cheap gas at the websites above, the cheapest gas was consistently at the Sam’s club right down the road from us.
Use a connected GPS with local gas prices: Many GPS systems that you can buy nowadays can connect and download local gas prices. TomTom Go 740 for example has the ability to connect automatically to access traffic feeds, updated fuel prices, Local Search powered by Google and weather – so you always know what's going on. Of course some of these connected GPS do have an extra subscription cost, so beware.
Use a gas rebate credit card to pay for gas: Depending upon the credit card you can save anywhere from 1-3% or more using your gas rebate credit card. Make sure to research to find the best card available.
Practice fuel economic driving: Do your best to drive in a way that conserves fuel, instead of wasting it. In other words, don't speed away from a green light, or speed up to stop at a red. Don't drive too fast on the highway, and do your best to drive at an even speed – without speeding up or slowing down too much. Also make sure to keep your tires properly inflated and remove any unnecessary weight from your vehicle.

What are some tips you’d like to share to save gas? Let us know in the comments!

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