How to Find the Best Loan for Your Next Car

Here are the best tips on how to get the best loan for your new carYoung man and young woman  applying for an auto loan
Purchasing a vehicle is one of the largest and most important financial investments that any individual will ever make during their lifetime, excluding the purchase of a home. But the process of acquiring loans for a vehicle can often be confusing. There are many questions to ask leading up to the purchase of a new vehicle and customers need to determine whether they want to buy new or used, whether they want to buy outright or lease and which type of vehicle that they wish to purchase.

However, before any of these decisions can be made, customers need to determine how they will pay for the vehicle. While paying in cash is an option for a select group of new car buyers, most people will have to rely on an auto loan. Determining from where this money will come from can be the trickiest part of the process. Fortunately, there are ways to make the search for the best loan a little bit easier.

Loan pros and cons
While automotive loans can carry several benefits, they are not without their drawbacks. The most obvious benefit is that by using a loan, customers don’t have to pay for their new vehicle in its entirety, all at once. Another benefit is that automotive loans can help build credit. While you need good credit to qualify for most loans, paying for those loans will only improve your credit score. Auto loans, of course, do add another monthly payment to your pile of bills. Keeping up with those payments will be a necessity for many months ahead.

Who provides loans?
Automotive loans are offered to customers through a number of financial institutions. According to Consumer Reports, banks and credit unions are often the most common sources. If you have a good credit standing, then you will be able to attain some of the best loan rates from these institutions. But if your credit score is less than desirable, you may not qualify. Another very common source for auto loans is the dealerships themselves.

Determining which loan is best
Once you determine where you want to apply for a loan, the next step is looking for the best rates across the board. It’s important to pay careful attention, as some loans may look good on the surface, but could spell financial trouble in the future. As vehicle prices increase with each passing year, longer loans become available. However, Herb Weisbaum at CNBC suggests that drivers choose the shortest loan that they can afford. Not only will longer loans cost drivers more in the long run, but paying off a loan sooner removes one more payment each month.

If you happen to find the loan that works best for you before you are ready to purchase your vehicle, then this can be used to your advantage. The DMV says that getting pre-approved for a loan can carry several benefits. If you are pre-approved, this removes a lot of uncertainty during the entire financing process when it comes time to pick up your next set of wheels.

There is no such thing as a perfect automotive loan, as each driver has specific wants and needs. Still, there are processes and guidelines set in place to help you find the right loan for you.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

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Choosing the Best Renters Insurance Policy

What’s the best renters insurance policy for you?Portion of a renter's Insurance form , keys and a pen on a desk
Whether it’s a busted pipe that floods your apartment, smoke damage from a neighbor’s kitchen fire or a broken window caused by a windstorm, renter’s insurance can mitigate your risk of losing valuable possessions due to events outside your control.

Renters insurance is a smart and surprisingly affordable way to protect your belongings when the unexpected happens, but there’s no one-size-fits-all policy. To determine the policy that best fits your material life, consider the following tips.

Take time to comprehend the contract
Although a renters insurance policy might be a dull read, it’s important to sift through the entire policy and understand it completely before signing off.

“When you have a renters policy, an insurer typically pays for damage to your personal property, the cost of staying elsewhere if your place is inhabitable (say, from smoke damage), and accidents for which you might be legally liable—for example, if a visitor gets hurt or has property damaged at your place and sues,” explains ConsumerReports.org writer Barbara Kiviat. “Make sure any policy you buy covers all three.”

For greater liability protection, Nerdwallet.com writer Juan Castillo recommends investing in “umbrella insurance, which gives you an additional layer of liability coverage above the limits of renters insurance.”

Kiviat also recommends paying special attention to the “perils” covered in the policy. According to Kiviat, you’ll be covered by most policies if your belongings are impacted by vandalism, smoke, riots, explosions, fire, hail and theft, but damage incurred due to floods and earthquakes typically require additional, distinct insurance policies.

Let circumstances dictate choice
Although renters insurance is considered an overall affordable expense because of the protection it provides, your budget still might be less than accommodating. If your budget is rigid, Castillo recommends you “consider increasing your deductible. But first ask yourself: ‘How much can you pay out of pocket in the event of a damage claim?’”

Your dwelling would not be a home without your furry best friend, and although a dog is usually a source of unconditional love, sometimes your precious Fido can exhibit Cujo-like behavior.

“A lawsuit against you over a dog bite could ruin your finances for years. If you want coverage for this, make sure dog bites are covered by the liability portion of your renters insurance policy,” advises Castillo.

The philosophy of “what’s mine is yours” is an amiable way to live with a roommate, but it probably shouldn’t extend to insurance matters.

“Before you sign a policy, have a frank discussion with your roommate about how to share insurance payments—especially if your roommate has a lot of stuff that could drive up the cost of the quote. Be sure you agree, too, on the type of renters insurance coverage you’ll get,” advises Castillo.

Do the math
Since most items lose value over time, it’s important to understand the difference between cost and value.

“Policies cover either the replacement cost of property or its actual value. The latter takes into account that older items may have lost value over time. You might save on your premium by opting for actual-value coverage, but it’s usually well worth the price to go with a policy that covers replacement cost, because that’s what you’ll have to pay to buy new things,” explains Kiviat. She also notes that you can purchase additional coverage if you posses high-ticket items that your policy won’t provide full replacement cost for.

Renters insurance is a must-have budget item, and with solid research and a thorough assessment of your belongings and lifestyle needs, you will be able to buy the right renters insurance policy.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Should You Cancel a Credit Card with $0 Balance?

The downsides of cancelling a credit card are usually not worth itCollage of overlapping credit cards
Many consumers are tempted to limit their debt by closing one or more credit cards as a result of the steady rise of the cost of living and credit card interest rates. However, though there are many reasons to close a credit card, there are ultimately even more and better reasons not to.

Adverse effect on credit score
If you care about maintaining a good credit score, you should avoid closing a credit card even if you have fully paid off the balance. This is because your credit score is based on a number of different factors that will almost all be adversely affected by closing a credit card.

“An account closure could wind up hurting your score because it eliminates the available credit line associated with the card and could easily skew your…credit utilization. It could also lower the age of your credit report, which may affect your score over time,” warns Jeanine Skowronski, credit card analyst and reporter for Bankrate.com.

According to FICO™, the United States’ biggest credit scoring service, 10 percent of your credit score is determined by credit mix. The more diverse the mix of your credit types, the better, so you should especially avoid cancelling a credit card if it is your only one or one of just a few.

Another 15 percent of your credit score is determined by the length of credit history. Because of this, you should take care not to close your oldest credit card. “Lenders tend to view borrowers with short credit histories as riskier than borrowers with longer histories,” writes LaToya Irby, credit and debt management expert, in a May 2017 article for TheBalance.com. “Closing your oldest credit card won’t impact your credit score immediately. But, once the credit card falls off your credit report several years down the road, you might see an unexpected credit score drop.”

More importantly, 35 percent of your credit score is determined by your payment history. If the credit card you want to close has a long and good history, closing it will hurt your credit score significantly. “If you have a good payment history on a card, then it is a good idea to leave that card open. This is especially important if you have a poor history with other cards or forms of credit,” says Chizoba Morah, contributor for Investopedia.com.

Debt and identity theft
Limiting debt and preventing identify theft are among the top two reasons people might decide to close a credit card. According to Morah, “When people feel they are spending too much money and cannot resist the lure of the credit card, they close the account.”

Furthermore, Morah adds that “by closing a credit card, they can lessen the chances that their identity will be stolen,” a risk that is increasingly at the front of people’s minds given the increase in identity theft in recent years.

While these are legitimate reasons to cancel a credit card, there are alternative methods to tackling these without incurring penalties on your credit report.

Alternative methods
There are a couple of steps you can take to keep a credit card open while making it very difficult to use it, thus limiting the aforementioned temptation and risk of identity theft. One step is to remove your credit card information from any online retailer that still has it, such as Amazon, so that it can never be unintentionally used by you or the retailer.

Another step is to destroy the physical credit card itself so that there is no risk of losing it or having it stolen. “If you have an inactive credit card or a card with a high balance, cut it up instead of closing it so that the history remains on your credit report but you won’t accumulate more charges on it,” advises Morah.

Ultimately, the negative consequences of canceling a credit card more than offset the potential benefits, especially as these benefits can be explored via alternative means. Unless the credit card you want to cancel is very new, mostly unused and one of many other credit cards, you are likely better off leaving it open.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

What Does Your Car Insurance Really Cover?

Deciphering car insurance coverageCar Insurance registration form
Car ownership involves purchasing auto insurance. But what circumstances does it protect you against? What does car insurance not cover? Discover the ins and outs of car insurance to make sure you have the coverage you need.

Collision coverage
According to Barbara Marquand, contributor at Nerdwallet.com, this type of insurance protects you during a car accident with either another car or an object. It also covers you if your car flips over and suffers damage.

Comprehensive coverage
This type of insurance is usually sold together with collision coverage, as a package. Comprehensive coverage protects you from harmful incidents not related to car accidents. Per Esurance.com, it covers damages incurred from storms, falling objects, vandalism and collisions with animals like deer.

Liability coverage
In the case of an accident with another car, this type of coverage goes towards paying for the person’s injuries and any car damage incurred.

Liability coverage is usually expressed in three numbers, as Marquand states. For example, a 100/300/500 liability coverage means it will pay a maximum of $100,000 bodily injury per person, $300,000 bodily injury per accident and $50,000 property damage per accident.

Each state varies in the minimum liability insurance that they require; check your state’s requirements before purchasing car insurance to make sure you comply with this standard.

Personal injury coverage
Even if you have health insurance, it’s wise to opt for a car insurance policy that includes personal injury coverage. It covers the medical bills for you or passengers in your car in the case of an accident. If the accident proves fatal, this insurance covers funeral expenses.

Personal injury coverage can be broken down into two subcategories: medical payment coverage or personal injury protection. Some states require one or the other policy, so check your state’s requirements before purchasing this type of insurance.

Uninsured motorist coverage
This insurance protects you if you have an accident with someone who is uninsured or underinsured. It covers your medical expenses if the other driver doesn’t have insurance. If the other driver’s insurance covers only some of your medical bills, then uninsured motorist coverage will pay the difference.

According to Christina Couch, contributor for Bankrate.com, some states have more uninsured drivers than others. In Mississippi, for example, one in three drivers is not insured. If you’re on the fence about whether or not to purchase this insurance option, find out what the statistic is for your state.

Circumstances not typically covered
Although collision and comprehensive car insurance policies can shield you from a wide variety of circumstances, there are some situations that they will not cover.

As Couch notes, car insurance usually won’t cover you for items that are damaged or stolen from your car. For instance, it would cover features that came with your car when you first bought it, such as the radio or CD player. However, it would not cover any gadgets or personal items that were in your car.

Car insurance usually will not cover drivers who are living with you, unless they are specifically listed on your car insurance policy. So this insurance would not cover an out-of-the-house friend or relative who borrowed your car.

Towing and roadside maintenance are two other services that car insurance typically will not cover. However, many insurance companies offer these services as available add-ons to your overall insurance package.

Equipped with this knowledge, you can have peace of mind knowing what each type of car insurance coverage means and exactly what circumstances your policy protects you from.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.