How to save on car insurance?

Auto insurance is a must if you own a vehicle, but no one wants to pay a rupee more than what is required. By knowing what factors affect the auto insurance premium rates you will be able to get a good coverage while protecting your finances. Remember car insurance is not a fixed cost that you need to spend every month. So don’t be complacent. There are discounts offered and you should be aware of them in order to grab them.

Here are 5 best ways that will help you save a considerable amount of money on car insurance each year.

  1. Increasing the deductibles – A deductible is the amount that you pay from your own pocket before you get the benefits of insurance at the time of filing a claim. If you raise your deductibles it will lower your annual premiums on car insurance Of course there is a trade-off involved as it increases your risk exposure. You will have to shell out a greater amount in case of an accident. Also you will not reach out to the insurance company for smaller repairs where the cost involved is less than the deductible that you have set. This route of saving money is advisable only if you have a history of safe driving. If your driving history is not very impressive then this option may not work in your favour. It will not make sense to pay high deductibles at the time of claims when accidents occur to save a few hundred rupees every month.

 

  1. Buy only what you need– Your insurance needs when you buy a brand new car and take out a car loan to pay for it are completely different than when your vehicle becomes old. When you have a car loan you are required to take a comprehensive and collision coverage. Collision coverage comes in handy in case of an accident while a comprehensive coverage pays for car repairs that occur due to theft or natural factors. When you buy an insurance cover carefully assess what you need. If you do not have enough savings to pay for repairs in case of damage or theft you would definitely need a strong financial safety net in the form of comprehensive and collision coverage. But if the car model is very old and the annual premium does not justify the car value you may give up on certain protections.

 

  1. Drive carefully to seek discounts– Insurance companies offer a lower premium to people who have not had any violations of traffic rules or accidents in a specific period. So if you have a good driving record you can reap its benefits by saving on auto insurance rates. Driving fewer kilometres per year and taking advanced driving courses also helps in grabbing some discounts. So if you’ve engaged in carpooling or if your office is near to the place of residence you can reach out to the insurance company to get lower premium rates.

 

  1. No claim bonus– If you do not make any claims under your existing policy you can get rewarded for it in the form of no claim bonus. Once the policy matures you can use this bonus to renew the policy at discounted premium rates.

 

  1. Good credit history-A good credit score can help you secure low insurance premiums. People with a good credit are considered to be safe drivers who do not file many claims, while people with a bad credit are considered as risky drivers. While this may seem illogical to you, insurance companies base their decisions on this rationale. They use the credit score of an individual to gauge the risk and determine the rates for the car insurance policy. So if you have an impressive credit history you can save a lot of money on insurance premiums.

 

  1. Shop around- There are a number of factors that affect the insurance rates and the only way to ensure that you pay the lowest premium possible is to shop around. Car insurance rates differ considerably between companies even for the same level of coverage. So get quotes from several insurers to compare the offers and select the best deal. There are various websites that help you get multiple online quotes at once and even compare them conveniently from the comfort of your home.

Saving on car insurance is all about knowledge and research. If you invest time and effort in understanding the factors that affect the rates and work on them to use them to your advantage you are sure to get the best deal.

Are you paying huge money for your auto loan?

All of us enjoy lavish lifestyle. And with availability of different types of loans in the market, it gets easier to splurge and live an exuberant state of life.

However at times, we spend more than what we need and it gets really hard to arrange for payouts of the loan. One of the commonly misused loans is an auto loan. Despite meeting all the formalities and checking the car loan eligibility sometimes you end up buying a really expensive new car and realize later on that you are paying a lot more than your comfortable means.

Sometimes, a failure in a business plan or shortage of funds could force you to do away with this added burden of life. But how to get away with the financial obligations when in the middle of a loan term—is a bigger question. For, failing to payback a loan installment can bring a red flag in your CIR and ruin the score for a very long time. After you fail to pay back EMI, it gets really difficult to clean the credit report. With a red flag, only question that would hover you mind is how to get a loan with low CIBIL score

So it is better you take the right steps beforehand and find out what all you can do when you are paying huge money for auto loan.

  1. Know the Car Valuation

First things first, find the market value of your car before you make any decision. You need to know your car’s worth and how much loan is pending and make a decision accordingly. You can easily calculate valuation of your car online on any of the auto selling portals. Just by filling details about your car such as date of manufacture, model, and condition, its valuation will be made. Alternatively, you can visit car dealers to know about the price of the similar deals and make up your mind.

Now after you know the value of your car, you know that if it is worth pulling the loan further.

  1. Sell the car

Well, it might not be the easiest of the options, but it is the wisest one. When paying your car loan EMI becomes a burden it is better to get rid of it all together. Selling the car gives you money which you can use to repay the loan and close the hard time forever.

The financial emergency would end and emotional difficulty may start as a follow up. You would need a lot of courage to get used to a lifestyle without a car. The need of the hour would be to use this opportunity to mend your finances and get back to a good credit score. You can buy a car within your budget later on.

  1. Refinance your loan

If you do not want to part away from your car, you should opt for refinancing. It enables you get better interest rate from some other lender. The new lender would pay for the current lender and you will pay to new lender at new rate.

Refinancing of loan works well when you haven’t made many installments. Also, by refinancing focus should be on reducing the car EMI and saving some cash in hand.

  1. Transfer the loan

Transferring the loan is basically transferring the ownership of loan to third party. For this, you need to check your bank’s regulations. These arrangements work the best when you have a friend or any other trusted party to assume your payments. However being a financial transaction, it is important that you get the loan transfer formally.

  1. Save on your car expenses

If you are able to make the installment with some of the difficulty, you may still continue your loan with certain change in your spending habits.

First of all you can save on your car insurance and car service expenses. Next you should make a budget so that you know what comes in and where it goes. You should maintain all the expenses and income. Use a mobile app to keep track of your expenses. It will help you outline the expenses you can do without. Hence you would save enough to retain some money during this hard time.

As important it is to save some funds month on month, as is to add some income avenues. Gradually the change in your financial habits would make your auto loan affordable to you.

Lost your job? Take these steps to avoid CIBIL score plummeting

A sudden loss of job is a very stressful event especially if one is the sole breadwinner of the family. All your financial plans and dreams suddenly grind to a halt. Uncertainty about the future and anxiety about how you will handle your expenses and pay off your debts bogs you down. In fact it can be quite overwhelming to think about the consequences of not meeting your financial commitments in time. Will unemployment affect your credit score? Let’s explore.

The fact that you are unemployed does not show up on your credit report. The credit bureaus do not factor in your employment status during the credit score calculation. Hence losing one’s job does not directly affect one’s credit score. But if you fall behind on your EMIs and credit card payments because of loss of income, it is sure to have a negative effect on your credit profile. Payments over 30 days late get reported to the bureaus and lower your score.

It all boils down to how you tackle the situation and deal with your debts during the period of unemployment. By being proactive you can ensure that your credit rating is protected even during this hardship. Here are a few important things that you should consider to deal with the situation.

Dip into your emergency fund- If you’ve saved enough money to cover for at least 6 months of your monthly expenses, then you need not worry too much. These funds are meant for such situations, as they help you stay on top of your payments while you search for a new job. But if the savings are not enough to cover your bills do not turn to credit cards, loans or cash advances to make ends meet. High interests on credit card balances and debt amounts will put additional strain on your finances and damage your credit score. Opening new loan accounts will reduce the average age of accounts and bring your score down.

 

Instead take the following steps. Not only will it help in avoiding the credit score plummeting but will help you improve CIBIL score.

Make a budget- The budget you made while you were employed won’t fit the current circumstances. Once you lose your primary source of income you need to cut down on unnecessary expenses. Eliminate all the spending that you can do without, and rework your budget. For example postponing holidays, cancelling subscriptions, cutting down on movies, dinner outings and salon visits will free up some extra cash and give you some breathing room while you figure out how to meet your debt payments. Factor in alternate sources of income like your spouse’s income, emergency funds, severance or part time income that you can rely on during this period.

Balance transfer- Consider transferring your credit card balance to a new card with an introductory offer of 0% APR. By paying no interest on your balance you can save a significant amount. Resist the urge to continue spending on credit cards. Start paying for your expenses by cash. This way you will be more disciplined in the way you spend.

Prioritize your debts- If you still fall short then you need to prioritize your debts. Figure out which debts are most important for you to service. Secured loans where you run the risk of losing your asset on non-payment should be the top priority. Unsecured loans, credit card bills can be lower priority debts. You can conserve your cash by making only the minimum payment on the credit card. Though rolling over balances will attract high interest charges sometimes you have to make tough choices to avoid defaults. Make sure you do not miss any payment and pay at least the minimum amount on time. If you delay or fall behind your payment, your credit score will be impacted.

Talk to your lenders- If you have a budget shortfall, defaulting on payments is not the only option. Remember, if your account goes into collections your credit score will take a serious hit. So it is always better to talk to your lenders and openly explain them about your financial difficulties. Express your desire to meet the obligations and ask them if they have any financial hardship programs. At times lenders agree to lower interest rates or set up more affordable repayment plans during the period of unemployment. You may even request for forbearance which will allow you to defer the payment schedule for a set period of time. Suspending payments will give you more room in your budget while you look for a new job.

Dealing with debt and maintaining your credit score is tough when you are out of job, but not impossible. Adjust your budget, talk to your lenders, use your emergency funds and resist the temptation of new debt. Careful planning and re-evaluation of goals will help you sail through this period.