Does Gender Impact Auto Insurance Rates?

A few facts you need to know

If you drive a vehicle, as most people do, auto insurance is a fact of life. And everyone is continuously looking for ways to cut their rates. But there are some interesting facts that you may not know when it comes to gender and its impact on those rates.

Car insurance rates are based on various factors, including your age; the make, model and year of your vehicle; and both your driving history and driving record. Location is also crucially important, with insurance rates varying greatly by state. But gender can also impact your rates, with women generally paying less than their male counterparts. While this may seem unfair on the surface, when you dig a bit deeper you’ll see there’s a rationale behind this decision as well.

The Insurance Institute for Highway Safety notes that “Many more men than women die each year in motor vehicle crashes. Men typically drive more miles than women and more often engage in risky driving practices including not using safety belts, driving while impaired by alcohol, and speeding. Crashes involving male drivers often are more severe than those involving female drivers.”

A 2015 study from InsuranceQuotes found that a 20-year-old male will pay just over 20 percent more than a 20-year-old female. “At the end of the day, young men are less cautious, riskier, more distracted drivers,” the study notes.

According to a 2015 article in the Huffington Post, there are three states (Massachusetts, North Carolina and Hawaii) that don’t allow gender to play a role in the setting of insurance rates. Pennsylvania, Michigan and Montana apply the same set of rating factors to both men and women, so there’s no difference in rates in those states either.

There are a few things you can do to alleviate the insurance burden you’re facing; this is especially true for younger drivers who may feel the heaviest crunch of high insurance costs. There are good student discounts of around 20 percent for students who maintain at least a 3.0 GPA and take part in a Driver’s Ed course. If you don’t drive a lot, you can also consider a pay-as-you drive policy that factors in how far, how well and how often you drive. Making fewer small claims and shopping around to compare pricing can also keep your premiums low.

There are many things to consider when it comes to auto insurance rates, but the most important thing you can do is speak to your insurance representative and ask about the best ways for you to save. If you do your homework, you may be able to save big.

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

What to Know About Trading in Your Existing Car

The steps you should be taking as you head to the dealership
Are you thinking about trading in your current car for a new one? Before rushing to the dealership and signing any papers, there are a few things you should consider.

What is your current car’s appraisal value?
“To determine [whether] you’re being offered a reasonable price on your trade-in, you first must know what your car is worth,” says Edmunds senior consumer advice editor Ronald Montoya.

You can do this via any appraisal resource, like Edmunds’ True Market Value tool or Kelley Blue Book (KBB). Be honest with yourself when assessing options and condition, or you may find yourself with a vastly inaccurate assessment.

What does the dealership say?
Next, you will want to take your current vehicle to a dealership to have the experts there appraise it and give you a trade-in amount offer. This number will not be the same at all dealerships, as it depends on various factors, including current inventory levels, probability of sale and current trade-in promotions.

How much do you still owe on your vehicle?
Find out how much you owe on your current car by requesting the payoff amount from your lender.

“This is the amount it will take to pay off your existing loan, and it may be different from any outstanding balance listed on your statement or [in your] coupon book. This difference may be because of a prepayment penalty or the way interest is calculated,” the Consumer Financial Protection Bureau website explains.

Compare that amount to the appraisal quote and the trade-in value given to you by the dealership. If you still have equity in your vehicle (that is, you are not “upside down” — owe more than your car is currently worth), you can use that to your advantage.

Can you negotiate?
As previously mentioned, don’t settle for the first number spit out at you. The first offer always starts low, as dealerships expect buyers to negotiate. Use your original appraisal from Edmunds or KBB as a basis for what is fair and see if they’ll match that number. If you are upside-down on your current car, see if they will give you a bit more for your trade-in if you plan to get your new car there that day. However, be sure to keep negotiations for your trade-in and your new car separate. In most cases, your trade-in can be used as a form of down payment and will be written into your new car contract as a credit against the price of the car.

Following these steps will set you on the right path to having a positive vehicle trade-in experience.

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

How Much Should You Spend on a Car Based on Your Income?

Using your income as a base so you don’t overextend yourself

Buying a car is oftencarpricevsincome_featured one of the largest expenses an individual will incur, and most will finance such a purchase. It’s crucial to plan ahead so you don’t inadvertently buy a vehicle that you can’t afford.

“Because financing a car means committing to a monthly loan payment for a period of time, your monthly budget plays the biggest role in deciding how much to spend on a car,” explained Managing Editor Jamie Page Deaton in a July 2015 article in U.S. News.

Using your net income as a basis
Before you even start the car shopping process, you should know how much you can afford to spend each month. Then you’ll be able to narrow down your vehicle search to those that fit within your budget.

Start by getting out a piece of paper and writing down your monthly income.

“To calculate how much you have available to spend on your car payments, first take into account your essential monthly expenses. These can include mortgage or rent, utilities, phone, food and entertainment, savings, and other expenses,” reported an August 2014 CarFax article in its CarFox blog.

“The total from this [deducted calculation], your disposable income, is the amount you have left to cover the cost of your new car.” Note that this estimated number is meant to cover all car expenses including gas, insurance and maintenance, and not just the monthly payment for the car.

Calculations: example 1
CarFax suggested you spend 10 to 20 percent of your monthly disposable income on a car payment and expenses. As an example, CarFax shares calculations for an individual with a monthly income of $4,000.

“If your gross pay is $4,000 a month and you spend $2,165 on essentials like mortgage, food and utilities, your disposable income is $1,835 a month. Spending 10 percent of your disposable income would mean a $184 car payment. Twenty percent of this would give you a car payment of $368.”

Calculations: example 2
Deaton suggested a calculation model for spending ability at no more than 15 percent of your net monthly pay, as long as you don’t have major debt other than a mortgage.

As an example, Deaton posited that someone who makes $50,000 per year will likely take home an annual net income of $44,180 after taxes. He noted in a July 2015 article in U.S. News & World Report that other expenses, like health insurance and retirement saving, will likely lower this net amount and offered a monthly estimate of $3,681 in net pay for this example.

At 15 percent, this person should be able to afford, at most, $552 per month for all car-related expenses (not just the car payment). Taking into consideration the median U.S. insurance rate at $100 per month, and assuming this person spends $125 per month on gas and saves or uses $50 per month for repairs and maintenance; this hypothetical person will have $277 left over each month for a car payment.

“Plug this number into a car affordability calculator with a $2,000 down payment, 4 percent sales tax and a car loan lasting five years with no interest, and a car costing just under $18,000 makes financial sense for this person. Of course, this person may not qualify for a no-interest loan, and shortening the loan term will increase the payment. [He or she] could also lower the monthly payment by having a larger down payment,” noted Deaton.

If you do have more debt, such as from credit cards and student loans, Deaton advised you look at your total monthly debt as a whole in determining how much you can afford for a car. You’ll want to spend less than 36 percent of your monthly net income on your total monthly debt.

If you need more help calculating what you can afford, contact us and we’ll be happy to help.

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

How the Type of Car Impacts Auto Insurance Premiums

What you drive affects how much you pay for insurance

When you’re buying a vehicle,CarTypeInsure_Featured there are many aspects to consider — comfort, fuel economy, technological features. — but one consideration that is often overlooked is potential auto insurance rates. And this oversight could be a very costly one, depending on the vehicle.

There are a variety of factors that go into determining a car insurance premium, even when it comes down to the vehicle type itself.

Size – It’s a common misconception that smaller cars often have lower insurance rates due to the fact that they have better maneuverability and ability to avoid a potential accident. In actuality, the opposite is true.

“Statistics prove smaller, sportier cars are driven at higher rates of speed by younger, riskier drivers. Because they’re involved in more accidents, they’re more expensive to insure,” reports Kelly Blue Book’s website KBB.com.

Does that mean larger vehicles like trucks and SUVs are cheaper to insure? Not necessarily. Bigger vehicles mean there is a larger potential to cause damage to other vehicles in the event of an accident, which inflates liability costs.

Price/status – KBB.com states that the cost of a vehicle is the first and primary consideration for most insurance companies when setting the price of the policy. Insurers’ rationale is typically that the more expensive the car, the more expensive it is to repair — namely when it comes to replacing parts, especially on foreign luxury vehicles, or when an entire vehicle is “totaled.”

Engine size – Speed comes back into play here, as the more horsepower a motor has, the more likely the car will be driven faster, leading to a higher risk of accidents. If motor size is not an important factor to you when choosing a vehicle, KBB.com recommends opting for a vehicle with less horsepower.

Likelihood of theft – This factor is somewhat arbitrary, as there can be any number of reasons cars get stolen, from overall desirability to demand for rare parts or even demand for common parts. Unfortunately, it’s those more desired vehicles that can carry with them higher insurance premiums.

The National Insurance Crime Bureau’s (NICB) most recent Hot Wheels report chronicles the most stolen vehicles in the United States. Honda Accord and Honda Civic were the top two most frequently stolen, respectively, in 2014. The list was also inundated with sporty imports due to their high desirability and to the fact that many are convertibles, and soft tops are relatively simple to break into.

Age – When it comes to used versus new in the fight for lower insurance premiums, you may be surprised that there is no clear-cut answer. It’s commonly believed that new vehicles will just cost more due to the fact that they’re new, but the advanced technological safety features and structure of new vehicles drive down those costs. Cars can now more easily avoid accidents before they occur and can also better protect their occupants if an accident does happen.

On the other hand, used vehicles aren’t always cheaper, due to their likelihood of theft.

“Newer cars may be more desirable but are actually targeted for theft far less often, as they are often equipped with anti-theft devices and GPS tracking systems,” auto information research site DMV.org discloses. “Also, car thieves tend to target older cars because they can easily disassemble them and sell their parts for profit.”

With so many varying factors affecting insurance rates, you are not likely to find one single vehicle with the lowest possible premiums. Instead, speak with your insurance provider for more information and guidance.

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

Tips for Getting the Best Car Loan

Get the best loan possible

As with any big purchase, NewCar_Featuredwhen purchasing a car you’ll want to make sure that you get the best deal possible, and that requires being smart about getting a car loan. Many people tend to overlook certain things during this process — they want to get in and out and on the road — but even a small oversight could cost you big bucks.

“When you buy a car, make sure it’s something you can afford, something that truly meets your budget,” adds Senior Director of Auto Finance Melinda Zabritski at Experian Automotive. Otherwise, you could risk running into financial problems in the future.

To make sure you’re making the right choice regarding an auto loan, here are five tips to keep in mind before you sign on the dotted line:

Know your credit score – It’s a good idea to check your credit by getting a preapproved car loan. Your credit score helps determine your car financing interest rate and is based on your credit report. If you have a high score, you qualify for a better car loan rate than if you have a low score. Thus, if you don’t know your credit score beforehand, you’re at a disadvantage when it comes to getting a good rate.

“Most people think their credit score is worse than it is,” says Senior Consumer Advice Editor Phil Reed at Edmunds.com. “When people don’t know their credit rating, the dealer can tell them almost anything.”

Avoid add-ons – Often you can finance add-ons — anything from leather seats to chrome wheels — separately. And while it may seem convenient to purchase them on the spot, your wallet might not agree.

Car salespeople “are really there to make extra profit for the dealership by increasing interest rates and selling extended warranties and add-ons such as fabric protection and paint sealant,” Reed says. “Dealers can write other fees into the contract and give them official-sounding names. These fees are another attempt to take profit on the back end of the deal when the buyer’s guard is down.” If you’re really aching for upscale window tinting, check with other companies, which may offer it for less money.

Do your homework – Know that lenders aren’t obligated to offer you the best possible rate for which you qualify. In general, new cars typically offer lower interest rates compared with used cars. In 2007, for example, car dealers marked up loans by an average 1.8 percent on used cars and 0.6 percent on new ones. To avoid overpaying on your loan, inform the lender that you’re looking in various places for your vehicle or that you already have another offer. That may help you get a better rate.

Keep quiet about what you can afford – You don’t want to go to a dealership and announce the exact monthly payment amount that you’re willing to pay each month. That may cause car dealers to use the longest auto loan term available to figure out your potential rates for monthly installments. For example, a car that costs $25,000 with a five-year loan may require the same monthly payments as a $16,000 car with a three-year loan — but you’ll end up paying more in interest for the higher-priced vehicle. Sometimes, if the car salesperson knows how much you can afford per month, negotiating a lower purchase price may be harder to do.

Go for the shorter-term loan – Most car buyers tend to lean toward longer loans because the monthly payment is smaller. However, in the long run you’re actually paying more the longer the loan runs due to interest.

“You definitely pay more in the long run because these long loans typically have high-interest rates,” says Mike Quincy of Consumer Reports Autos. Is there a perfect loan time for your vehicle? “Try to limit your car loan to about 48 months,” advises Quincy. “That’s the optimal amount of time you should pay for your car.”

Stop by today to find out more about what rates we can offer so you can shop with confidence.

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

Buying Out Your Leased Vehicle: The Pros and Cons

What are the advantages of a lease buyout?AprilFeatured_LeaseBuyout
The car you’ve been leasing for the past 36 months is amazing — still with low mileage and still in great shape; it rides like a dream and is perfect for your lifestyle. You’re strongly considering keeping the car when your lease is up by buying it out. But don’t be so hasty.

There are certain situations that are better suited over others for a lease buyout, but what are the positive and negative aspects of the situation?

Advantages
So maybe you didn’t keep your car in such great shape — it’s got a couple of dents and scratches. Or perhaps you went a hundred or so miles over your mileage limit. Unless you purchased the excess coverage, that “small” damage and those “few” miles can add up in the form of fees upon return of the leased car. If you decide to purchase the car, all those extra, unforeseen fees will disappear.

You can also potentially save yourself money by renegotiating with a lending company. Lucy Lazarony from Bankrate.com recommends letting the leasing company come to you.

“Make the first move and you could blow your best chance of negotiating a good deal on your lease buyout,” Lazarony says, adding that this is also the time to ask about other possible incentives, such as eliminating the purchase-option fee or discounting financing on your buyout loan.

Lazarony notes that successful negotiation is much more likely when you are dealing with a smalltime lender.

On the other hand, if you want to avoid getting those pesky phone calls constantly inquiring about your lease-end decisions and money is less of a concern, then informing the company about your buyout choice right away is the way to go.

“Let’s face it, shopping for a car takes a lot of time and energy. Buying your leased car can save several weekends on car lots and most of the frustration that comes with the process,” according to Russ Heaps of Autotrader.com.

Finally, you might get lucky and your vehicle is worth more than its residual value (also known as the payoff amount), so your purchase price will be much lower than expected.

Disadvantages
The other side of the coin, however, would be that your vehicle’s residual value is higher than what it’s worth, turning a positive into a negative. Furthermore, the entire premise of a lease is to make it more attractive for those who want to return the car when their term is up. The pricing formula includes adjusting three factors: initial sale price, interest rate and residual value.

“First, automakers typically lower the initial sale price of the car, called the ‘cap cost.’ They may also lower the interest rate of the lease, aka the ‘money factor,’” explains Tara Baukus Mello of Bankrate.com. “These changes may be done in combination with increasing the residual value or the amount you pay if you want to buy the car at the end of the lease.”

That said, lease buyouts generally end up being more expensive than if you had just decided to purchase the vehicle from the get-go.

Buying, leasing and buying out your lease are not your only options, however.

“If you don’t want to buy the car, you can apply your equity to a new lease,” says consumer expert Herb Weisbaum. “You could also choose to sell your leased car to the dealer. Dealers need low-mileage used vehicles. So right now they are often willing to pay more than the residual value, especially if the car is in good condition and within the mileage allowance.”

Regardless of which option you are leaning toward, just remember to do your research. A smart, informed consumer always ends up with the best deals. And when you have any questions about finances, give us a call or stop by.

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

Behind Car and Driver’s “10Best” List

Why a Car and Driver designation means so much

There are plenty ofCAndD_Featured professional organizations that give today’s vehicles recognition. Whether they’re ranking the coolest, the greenest or most fuel efficient, or simply the most affordable, you can find a list for whatever it is you’re looking for. But there is one list that very well may rise above them all, and that’s the Car and Driver “10Best” list that honors the 10 best vehicles you can buy.

There are around 150 new car models on the road today, so when you narrow the list down to 10, any of these models is sure to be a great choice.

Car and Driver created a list that cuts through the clutter and shows off the best the automotive industry has to offer. All of these vehicles have to cost less than $80,000 (you have to be relatively fair), they provide bang for their buck (a lot of car for the money), they stand out in their respective segments and they are what Car and Driver calls “graceful in motion.”

There are three categories of vehicles for you to choose from: affordable family vehicles, sports cars and luxury sedans.

If you’re looking for an affordable family vehicle, Car and Driver named the Honda Accord, Volkswagen Golf/GTI, as well as the MAZDA3 and MAZDA6 four of them to its 2015 “10Best” list. Each of these vehicles offers practical and reliable transportation without breaking the bank. The MAZDA3 is the most affordable, with an MSRP starting around $18,000, while the Accord has been named to the “10Best” list an astounding 29 times.

If you’re looking for the best in performance, there is a handful of options ranging from the affordable Ford Mustang GT (at just over $30,000) that cranks out 435 hp, to the small yet powerful BMW M235i Coupe with up to 320 hp and an impressive power to weight ratio. If you have a bit more to spend, you’d want to consider the Porsche Cayman/Boxster, well known for its phenomenal drivability, or the iconic Chevrolet Corvette Stingray.

There are also two luxury sedans on the “10Best” list, each with its own impressive resume. The 2015 Cadillac CTS is also a big threat to the luxury imports from Japan and Europe.

The other luxury sedan, and final vehicle on the “10Best” list, is the Tesla Model S 60, arguably the most groundbreaking vehicle on the road today. This electric vehicle is so much more than economical transportation; it competes with some of the best vehicles available on the road today, and does so without the use of a gasoline engine.

Car and Driver summed it up perfectly: “It’s attractive, comfortable, fast, practical, technically fascinating, and not overpriced. Most important, it’s not just a good electric vehicle, it’s a good car.”

Regardless of which vehicle you choose, stop by today to let us help with whatever finance options you need.

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