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Choosing Appropriate Used Car Insurance

Choosing appropriate used car insurance after you have made a used car purchase can be a difficult endeavor. For one thing, you have to take into consideration your ownership status of the vehicle. If you have bought it outright for cash, your options are a lot more wide open than they are in cases when you have had to borrow money to buy the car. Ownership status is an important consideration. So is the monetary value of the car. In financial terms, certain portions of your auto policy are really just protecting your financial stake in the vehicle. If the car is worth a lot of money, your stake in it is much greater than it is if the car is not worth all that much. So the car's monetary value is also important. Finally, all this other discussion is really predicated on another factor-your budget. Regardless of how much coverage you need to have or should have, you can only get it if you can afford to pay for it.

Auto Ownership Status is Important

Your ownership status of your used vehicle is very important to consider. If you bought the car free and clear, you have a full array of options when it comes to your car insurance. You could opt to only carry the minimum required coverage your state mandates, just enough to get a license plate and get the car out on the road. If you take this option, you are essentially choosing to self-insure for any additional expenses not covered by your basic policy. If any other expenses come up in the wake of a large accident, you will be personally responsible for them if your insurance is all spent. That's how auto insurance financial responsibility works.

It might work to your advantage to carry lesser protection and pocket the savings; then again, it may not. It all depends on your ability to respond to a greater need if a serious accident strikes. If you have the financial resources and quick access to cash to truly self-insure against such a risk, then it might be smart to hedge your bets and allow the money you save in the short-term to work for you. But if you do not have the capital to take care of these kinds of possible outlays of money out of pocket, it might be better to go ahead and opt for more protection, even if it isn't required.

On the other hand, if you have taken out a bank loan to pay for your used car, you might be hamstrung into taking on the option of a full coverage auto insurance policy anyway. More often than not, lien holders will want to see proof of insurance including collision and comprehensive coverage, as long as you still owe money on the car. This is just another reason why you want to avoid taking out bad loans on vehicles that will drop quickly in value while you pay down your obligations on high-interest debt. Throwing money after these loans while also having to keep collision and comprehensive on a car that isn't worth insuring to that extent any longer is quite simply a waste of money times two. Take the long-term consequences of your purchase into consideration before taking out any kind of bank loan on a used car (or any car, for that matter).

Consider Your Car's Monetary Value

Your car's monetary value is an important consideration in the context of its affordability to insure and the plans you might have for long-term repayment of loans. Getting a good deal on a used car is great, but not at the expense of being stuck with a high-interest loan forcing you to spend several years repaying it while being obligated to carry full coverage auto insurance even as the car depreciates in value. A measure of restraint is in order, especially with regard to used car purchases. If you cannot afford a certain model of car new, don't just settle for a used model for the pure sake of driving your dream machine, not if it ends up saddling you with similar debts. Used car purchases can be tricky, because the interest rates on loans can be higher, and because you have certain auto insurance obligations on the car as long as you owe money on it. So you could end up paying almost as much money for a used car as you would a new one if you're not careful.

If the used car you bought is worth a lot of money, of course you want to protect your investment with as much auto insurance as you can possibly afford. Take the time before you buy to look at all your possibilities. Include auto insurance comparison in your price shopping. You might find that a car which costs a little more to buy is actually a lot cheaper to insure, saving you money in spite of the higher sticker price. Do just a little more digging and you could end up saving yourself some money. And that is really the whole point of buying used: saving money versus buying new.

Budgetary Restraints on Insurance Choices

And of course, saving money is the first and last consideration most of us take when we are making our major purchase decisions. If you are anything like most people, you have little or no extra money to throw around; living paycheck to paycheck has become the rule of thumb in the working class today. We consider ourselves fortunate just to keep getting by and hanging on to what we've got from month to month. So with all of this in mind, the idea of budgetary restraint has to have a major role in shaping your auto insurance choices.

Whether or not you think you should get more insurance or you need more insurance or you really ought to have more insurance for your used car, you can't get more insurance if you can't afford to pay for it. The final sticking point that ends up dictating many of our final choices is our budget. It is a ll well and good to know and understand the value of car insurance, and to appreciate the need to protect your used car investment in a substantive way. But it is quite another to be able to do it given the monetary constraints you are trying to work around. For so many of us, those constraints are the very things forcing us to choose to buy used rather than new, the very reasons we have to take out a five year loan on a five year old car. We know and understand the principle behind intelligent insurance planning; but sometimes our wallets force our hands.

With that said, try to do all you can to get the most out of your used car insurance plan. Choose appropriate used car insurance that gives you the best protection you can find for the lowest price you can locate. That's about all you can hope for as a consumer. Used car insurance is just one more area in which we are limited by our individual financial situations.


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