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Calculate Your Savings on Cars and Auto Insurance

By Rstaib Posted : 02/13/2009

Trying to save money on cars and auto insurance often means asking some tough questions about cutting costs or spending more. Should you follow these "tips" or save your time and money?

Should You? Quick Answer
Raise your deductibles? Maybe.
Buy a vehicle report? Yes.
Buy an extended warranty? Be careful.

Should you: Raise your deductibles for comprehensive and collision coverage?
Quick answer: It really depends.

When it comes to saving money on car insurance, how do you figure out whether you should give up a little coverage or pay a little more for a lower deductible?

The effect of raising or lowering deductibles for comprehensive and collision coverages varies between car insurance companies and is different for each situation, so there is no "quick answer" to this question. Until you see actual prices for different deductibles, you won't know whether it's worth it.

The price of your car, the cost to repair your car, how likely it is to be stolen, and where you live (city, suburb or the country) can all affect the final price you pay for car insurance. If you're paying a lot, you can save more. If your rates are relatively low, it's harder to squeeze out savings by simply raising your comprehensive and collision deductibles.

The average driver has a Comp or collision loss every seven to 10 years. If you can save $75 each year by raising your collision deductible from $500 to $1000, and you don't have a collision loss for 10 years, you will have saved $750 in premium payments - but would pay an additional $500 deductible if you have an accident. Net savings: $250.

To see how your rates compare to average quotes in your area, check out our RateWatch for Car Insurance. If you're paying more than the average driver in your area, it's a good idea to compare rates and consider higher deductibles.

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Should you: Get a vehicle history report before you buy a used car?
Quick answer: Yes.

This decision is easy. Always get a vehicle history report on a used car before you buy it, (unless it's the car your grandmother drove only to church for the past 10 years). Some sellers and dealers offer these reports as a selling point - and be sure to check it thoroughly to make sure it matches the dealer's description. A vehicle history report is a relatively cheap way to make sure you're not making an avoidable mistake.

The largest provider of vehicle history reports, Carfax, charges around $30 for a single report, $35 for 10, and $40 for as many as you want in a month. A typical report includes accidents, recalls, current mileage, number and type of owners, suspicious odometer readings, whether the car was totaled or turned in as a lemon, and more. Some providers, such as Carfax, have even started to include service records.

In addition to getting an official vehicle history, check online ratings for safety and read consumer reviews about service issues. The good news about buying a car is that it's easier than ever to spot potential problems!

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Should you: Buy an extended warranty for a new or used car?
Quick answer: Do the math and be careful.

In this economy, people are more likely to buy a used car than a new one, and that raises the question of protecting your investment with an extended warranty. One option is to buy a certified used car, which means that the car has been inspected thoroughly and the manufacturer has extended its own original warranty to cover the car for an additional period. If the terms are the same as a new car warranty, this option is often worth the additional price, because it means you won't pay for repairs to faulty parts, the same as with a new car.

Some dealerships will offer an aftermarket warranty from a third-party provider, which may be an insurance company or a warranty company. Make sure you compare prices for different protection levels and deductible amounts. And, be aware that some companies will make you pay for repairs out of pocket and reimburse you later. Some warranty contracts will insist on approving repairs or repair shops before work can be started, and some deductibles will apply on a per part basis, rather than a per visit basis. These differences could be key if you're comparing two warranties that are otherwise similar. If the cost seems high and the actual coverage looks limited, you might want to save your money.

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