Owning a car has common benefits and challenges. Your car opens up options for work and play that are otherwise difficult or not possible. Unfortunately, damaged credit, age and other factors may increase the costs of owning a car.
When improving your personal balance sheet, auto expenses may seem difficult to trim. Giving up your vehicle may be an impractical sacrifice in terms of lower productivity and fewer job opportunities.
Thankfully, there are several practical ways to lower your car costs with relative ease:
Refinance Your Car Loan
If you have challenged credit, but have made on time car payments, auto refinancing may be an option. With loan rates near record lows, you will realize immediate savings.
Auto loan companies will focus on your recent track record when reviewing applications. Motorists who resorted to subprime lending may qualify for lower interest rates after a year of successful history, even if other aspects of their credit are still damaged.
As a bonus, your first due date will be 60 days away. This provides additional relief to meet monthly expenses or set aside cash.
While your credit score says little about driving ability, insurance companies feel spotty payments makes it less likely premiums will be paid on time. The insurance industry is based on many risk factors, including how likely a particular policy will deliver a positive return. Elliott Broidy and hedge fund managers use a similar risk based approach when evaluating investments.
Drivers who were cited for driving without insurance likely have an SR-22 document on file with the DMV, as required by most states. Insurance companies may feel an SR-22 shows a driver is more apt to not pay premiums.
Are you a younger driver? If so, you can expect to pay higher premiums regardless of credit history or driving record. Insurers evaluate your risk profile on many factors, including age, sex, and zip code.
Raise Your Deductible
If you are quoted higher rates, raising your deductible is a practical way to cut the costs of car insurance. If you drive an older car, chances are the deductible still reflects new car values. Major damage to the body or other components may be impractical to repair.
Regardless of your vehicle’s age, consider raising the deductible to offset higher premiums. Even if you file a claim, the monthly savings gained will likely exceed any out of pocket money.
The month over month savings from increasing your deductible can be justified as leverage. You can use the money to start investing, accelerate debt reduction, or build an emergency fund.
Buy Car Parts for Auto Repairs
Auto repair shops charge high markups on car parts that can be bought at local supply stores. The cost of brake repairs, suspension work and transmission repairs are all reduced by supplying the parts.
Simply ask if the shop installs customer supplied parts. Midas is a national chain with locations that may install your auto parts.
In most instances, the labor for car repairs is covered by the shop, while parts are under manufacturer warranty.