COVID-19 is having a massive impact on the global economy and very few industries have been untouched by it. If your business relies on employees working in a physical space and profits only when people are willing to shop and spend, thereâs no escaping it.Â
Itâs no surprise, therefore, that the auto industry has been so negatively affected. In a recent guide, we looked at the many auto loan relief options that manufacturers offering in light of the coronavirus. In this guide, weâll highlight the ways this industry has been stung by the pandemic and look at what it means for the future of the US automobile and car financing sectors.
How is the Coronavirus Affecting Car Sales?
The automobile manufacturing industry experienced a minor surge at the beginning of 2020 but COVID-19 began to impact sales heavily in March. Many companies, Fiat Chrysler and General Motors included, began the year with strong momentum behind them, but March hit them hard and negated all the gains made during the first two months.
Both of these companies recorded losses for the first quarter of 2020, with Fiat Chrysler losing 10% in total.
Toyota, one of Americaâs biggest manufacturers, also recorded massive losses for March, with daily sales dropping by nearly a third during this month.
All of this is to be expected. The US has yet to announce the sort of national lockdowns we have seen in countries like the United Kingdom, Italy, Spain, and Greece, but many citizens are in self-isolation, countless businesses have shut their doors, and there are fewer cars on the road as a result.
Combine this with the fact that people are losing their jobs and worrying about their futures, and itâs easy to see why car sales have been affected so severely.Â
What are Manufacturers Doing About It?
Automobile manufacturers have moved quickly to stem the rising tide of financial devastation caused by COVID-19. Fiat Chrysler, for instance, is offering improved auto loan conditions to convince consumers to make sizeable purchases and keep the wheels turning. It has also made it easier to purchase a car for those in self-isolation or lockdown.
You can now buy a Fiat Chrysler online, with options for trade-ins, auto loans, and pretty much everything else you would get when buying in person.
Theyâre making it easier for you to buy because they need you to make that commitment. At the same time, the production of many new vehicles has been halted.
While some plants and showrooms are still open in the United States, Europe has experienced an almost continent-wide shutdown, leading to a decreased demand.Â
Manufacturers are also anticipating that things will get worse, as many experts predict that the USA will experience a spread similar to that of Spain and Italy.
How Has COVID-19 Hurt the Automobile Industry?
We have already touched upon some of the ways that COVID-19 has impacted the automobile industry, but the problem goes far beyond people not being able to make it to their local showrooms. Furthermore, if events in Europe are anything to go by, the problems will only get worse and it could be several years before the automobile sector recovers.
Here are a few reasons the industry has been hit hard:
There is a genuine fear that the COVID-19 pandemic will remain for all of 2020 and even beyond that. It seems unlikely that it will last for that long, but if the country doesnât go into lockdown and a vaccine isnât produced, itâs possible.Â
With this in mind, many consumers are putting off buying new cars out of fear that they simply wonât need them. New cars depreciate rapidly and can lose 20% in the first year. Whatâs the point of spending $30,000 on a new car if it will be worth $24,000 by the time you actually get behind the wheel?
Struggling Stock Markets
The stock market doesnât just impact big companies and investors. It also affects average American families who have their money tied into savings accounts, stocks, and pensions. Savers have lost a lot of money and are worried that theyâll lose even more in the near future, making buying a $30,000+ vehicle incredibly reckless.Â
Price of Gas
One of the few things that the automobile industry has on its side is the price of fuel, which has plummeted in the past few weeks. The problem is, no one cares about the price of fuel when theyâre stuck inside the house worrying about their health and their jobs.
Automotive plants canât simply shut down for a few weeks and then start up again when everything has cleared up. Many plants were already struggling to keep things together and once production stops and their profits disappear, they may close down entirely, taking hundreds, if not thousands of jobs with them.Â
Bottom Line: Car Sales After COVID-19
Itâs highly likely that the hard times will continue for the manufacturing industry. As the coronavirus continues to spread across the country, manufacturing plants will struggle to retain employees, showrooms will shut, and fewer Americans will be willing to pay the $30,000+ required for a new vehicle.
Whether this impacts the future price and availability of automobiles remains to be seen, but itâs highly likely that weâll see some massive changes in this industry. Americaâs best-loved manufacturers will lose millions and could be sent to the brink of financial destruction, while many salespersons and mechanics will likely lose their jobs as demand drops and garages/showrooms close down.Â
How COVID-19 is Affecting Auto Loans is a post from Pocket Your Dollars.
Weâve been hearing about electric cars for a while, but it sometimes seems that the only people who buy them are either very into being energy efficient or very wealthy. But there are a lot of good reasons for you to consider buying an electric car. They are good for the environment, but they can also be good for your pocketbook. And who doesnât want to satisfy the demands of their conscience and their bank account at the same time?
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1. Electric cars help the U.S. with energy independence.
The United States spends about $300 billion importing oil into the country. Thatâs two-thirds of the U.S. trade deficit. Being dependent upon foreign oil leaves the United States more vulnerable to international problems and fluctuations in the supply of oil abroad.
2. Electric cars are more efficient.
With an electric car you never have to stop for gas. You can charge your electric car in your own garage overnight and be ready to travel wherever you want to go in the morning. In addition, you wonât be wasting any time or money buying snacks or pumping gas at the gas station.
3) Youâll likely save money.
Even though oil prices are the lowest theyâve been since 2008, electricity is still the less expensive option. Right now, if you purchase an electric car, recent data shows you will spend $3.74 worth of electricity to travel 100 miles. However, if you purchase a comparable car that uses gasoline, it will cost you about $13.36 to travel 100 miles. In addition, gas prices have a way of rising (or at least being unpredictable), so that journey of 100 miles can quickly get even more expensive for people with conventional cars.
4) You can get paid to buy an electric car .
Right now, the federal government offers a tax credit that can reduce the cost of a new electric car by up to $7,500. That can effectively eliminate the cost difference between a gasoline-powered car and an electric car. Sometimes it can even make the cost of buying a gasoline-powered car more than the cost of buying an electric car. However, the tax credit offer might not last forever, so you might want to buy an electric car sooner rather than later if thatâs an important factor for you.
Related Article: 3 Tips for Claiming the Energy Tax Credit
5) Theyâre Low Maintenance
With an electric car youâre not going to have to take your car to the mechanic as often. Although all cars may have problems, electric cars generally have lower maintenance costs than gasoline-based car. With an electric car youâll also spend less time worrying about how to get by while your car is in the shop, or waiting around at the garage for the maintenance to be performed.
You donât have to be a hippie or a billionaire to opt for an electric car. There are advantages for anyone who takes relatively short car trips and has access to charging facilities.
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The post 5 Reasons to Buy an Electric Car appeared first on SmartAsset Blog.
When you have an insurance policy, you may have to foot the bill for some of your medical expenses before your insurance company starts chipping in. This initial amount is your insurance deductible. The size of deductibles can vary depending on the specifics of your plan, and youâll want to consider the deductible as one of many factors when youâre choosing your health insurance.
The Basics of Insurance Deductibles
Your insurance deductible is the amount of money that youâll have to pay before the insurance company will provide any assistance. So, if you have a $600 deductible for your health insurance, that means youâll need to pay $600 out of your own pocket for any doctorâs visits, prescriptions, tests or any other medical services before insurance contributions will commence.
Deductibles apply for many different types of insurance, the most notable being health insurance, car insurance and homeowners insurance. Weâll go through details specific to each type in turn.
Health Insurance Deductibles
Health insurance deductibles will vary in amount depending on the type of insurance plan you have. Typically, plans with a high deductible have lower monthly premiums, while plans with lower deductibles will tend to have higher premiums. In other words, if you have to spend a lot to reach your deductible, the tradeoff is you pay less in premiums every month. The extreme version of this is the high-deductible health plan (HDHP), which has a deductible of at least $1,350 for an individual and $2,700 for a family. HDHPs also come with access to a health savings account (HSA), which allows you to save up for medical expenses with pre-tax money.
Once you reach your deductible, thatâs when cost-sharing measures like copays and coinsurance come into play. Some plans will have copays for certain services that apply before you hit your deductible, but not all.
Homeowners and Car Insurance Deductibles
With a car insurance deductible, your insurance company will typically pay for any repairs necessary after you hit your deductible, provided you have a plan that covers the costs of repairs. The same is true with homeowners insurance. This differs from a health insurance deductible, where you will almost surely have to keep paying at least part of the bill after you hit it.
The calculus for choosing your deductible is slightly different with these two insurance types than with health insurance. With the latter, itâs highly unlikely that you wonât have any medical expenses during the course of the year. Most people that have health insurance are going to use it. With homeowners and car insurance though, thatâs not the case. Itâs very possible that you go a year without getting in a car accident or your house burning down or getting burglarized.
Choosing Your Deductible
Odds are youâll have options to choose from when selecting your health insurance plan. Those options will likely have varying deductibles. When making the choice between these options, consider the state of your health.
Is there a good chance youâll have an annual check-up but not much else? If thatâs the case, you may be suited for a plan with a higher deductible and lower premiums. If instead you expect to have one or more procedures during the year or you require expensive medication, you may be better off accepting the higher premiums in exchange for a lower deductible.
Of course, many of your medical expenses will be impossible to predict beforehand. Therefore, youâll also want to consider how risky you want to be with your deductible. If you have plenty of savings and could handle a few hefty medical bills, you may be more inclined to take the gamble on a high deductible. If youâre stretched thinner, this may not be the case. You may not want to risk opting for the high deductible and then getting hit with a huge bill thatâs all your responsibility.
Because of deductibles, youâll still have pay a portion of your medical expenses before you can rely on your insurance company. When youâre considering which insurance plan is right for you, make sure to factor the deductible into your decision. If you have plenty of savings and youâre fine with some risk, you may want to opt for a higher deductible and lower premiums. If youâre more risk averse, you may decide to accept the higher premiums in exchange for a lower deductible.
Tips for Protecting Against Risk
- Having an emergency fund in place can help provide a cushion that allows you to choose a higher deductible. You can stash your emergency fund in either a CD ladder or a high-yield savings account.
- If youâre not sure how an unexpected medical expense would fit into your finances, consider working with a financial advisor. Finding the right financial advisor that fits your needs doesnât have to be hard. SmartAssetâs free tool matches you with financial advisors in your area in 5 minutes. If youâre ready to be matched with local advisors that will help you achieve your financial goals, get started now.
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The post What Is an Insurance Deductible? appeared first on SmartAsset Blog.
Full coverageÂ car insuranceÂ covers you for most eventualities, but it is also expensive. You get what you pay for, and in this case, what you pay for isÂ liability coverage,Â collision coverage, andÂ comprehensive coverage.
The question is, how essential are all of these coverage options and at what point do they become surplus to requirements?
YourÂ insurance coverageÂ is never set in stone. You can increase your coverage as needed and drop coverage when it is no longer needed. Staying on top of everything is just a case of making the right choices at the right time.
What isÂ Full CoverageÂ Auto Insurance?
There are several different types ofÂ auto insurance, each covering you for something different. The most important cover is something known asÂ liability insurance, which spansÂ bodily injuryÂ andÂ property damageÂ and covers you when you injure another driver or their property.
Liability insuranceÂ is required in nearly all states and there are minimum coverage limits in all of them. To make sure you are legal, you need to meet these limits. If you want additional liability cover to protect your personal assets, you can pay more and aim higher.
Collision coverageÂ andÂ comprehensive coverageÂ are also required if you wantÂ full coverageÂ car insurance. WithÂ collision insurance, you are protected against damage caused to your own property, whether that damage is the result of a road traffic accident or a collision with a wall or guardrail. As forÂ comprehensive insurance, it protects you againstÂ vandalism, theft, weather damage, and most of the things not covered byÂ collision insurance.
AÂ full coverageÂ policy should also include some personal injury protection (PIP) cover, whether in the form of medical payments coverage or personal injury protection coverage. Both are designed to help you with medical bills and other expenses resulting from personal injury, while PIP goes one step further and covers you for transportation costs, childcare expenses, and loss of work.
All of these options are part of aÂ full coverageÂ insuranceÂ policy. There are also many additional coverage options and add-ons, but these aren’t necessarily part of aÂ full coverageÂ policy and, in most cases, need to be added for an extra cost. These options include:
- Uninsured/Underinsured Motorist Coverage:Â Minimum coverÂ car insuranceÂ won’t protect you if you are hit by an uninsured driver. It has been estimated that as many as 13% of all drivers on US roads are not insured and, in some states, this climbs as high as 25%. With uninsured motorist coverage, you will be protected for such eventualities.
- Gap Insurance:Â When you purchase a brandÂ new carÂ on finance, the lender will often insist on gap insurance. A car depreciates rapidly and if that depreciation drops the value below the balance of the loan, the lender stands to lose out. Gap insurance protects them against such an outcome and covers the difference to make sure they get their money back if the car is written off.
- New CarÂ Replacement:Â AÂ new carÂ replacement policy will do exactly what the name suggests, providing you with a new vehicle in the event your current one is written off. Depending on the insurer, there will be limits concerning the age of the vehicle and the number of miles on the clock.
- Roadside Assistance:Â With roadside assistance, you will be covered for essential services if you break down by the side of the road. It typically includes tire changes, fuel delivery, towing, lost key replacement, and more.
- Pet Injury:Â What happens when your pet gets injured during a road traffic accident? If you have pet insurance, they will be covered through that. If not, many providers will give you a pet injury insurance add-on.
- Rental Car Reimbursement:Â If your car is stolen or getting repaired, rental car reimbursement coverage will help you to cover the costs of a short term rental. This insurance option is often fixed at a daily sum of between $50 and $100 and lasts for no more than 30 days.
- Accidental Death:Â A type ofÂ life insuranceÂ that focuses on accidents, paying a death benefit to a beneficiary when a loved one dies in an accident.
When to Drop FullÂ CarÂ InsuranceÂ Coverage
TheÂ value of the carÂ you drive, along with yourÂ insurance ratesÂ and your driving record, will impact whether or not you should dropÂ full coverageÂ auto insurance. Take a look at the following examples to discover when this might be the right option for you:
1. YourÂ Insurance PremiumsÂ are too High
If yourÂ carÂ insuranceÂ ratesÂ are higher than the size of aÂ payoutÂ following an accident, it might be time to trim the fat. Insurance is a gamble, a form of protection. You pay a small sum of money in the knowledge that you’ll be covered for a large sum if something untoward happens. But if you reach a point when your premiums begin to exceed the potentialÂ payout, it’s no longer useful.
2. You Have an Old Car
The lower yourÂ car’s value, the less you needÂ full coverageÂ car insurance. If you’re driving around in a car that costs less than $1,000 and you’re paying $2,000 for the pleasure, you may as well be throwing your money down a wishing well.
In the event of an accident, you’ll have a deductible to pay and that deductible could be near theÂ value of the car. In such cases, it will nearly always make more sense to stick with minimum insurance and to just scrap your car if anything serious happens.
3. You Have a LargeÂ Emergency Fund
AnÂ emergency fundÂ is a sum of money you keep to one side to cover you for emergencies, including job issues, medical bills, broken appliances, and car troubles. If you have such a fund available, you have a few more options at your disposal and can consider droppingÂ full coverage.
It will save you money in the long term and if anything happens in the short term, you still have options and won’t be completely financially destitute.
Bottom Line: When It’s Needed
While there are times whenÂ full coverageÂ is unnecessary and excessive, there are also times when it is essential. If you have aÂ new car, for instance, you should get all of the cover you can afford, otherwise, you could be seriously out of pocket following an accident or theft.
When Should you Drop Full Coverage on your Car? is a post from Pocket Your Dollars.
For many people, car insurance is a major expense category in the household budget. And because itâs against the law to drive without car insurance, itâs not a budget item that can be eliminated unless youâre willing to go car-free. That doesnât mean, though, that youâre stuck paying sky-high rates. Hereâs how to get cheap car insurance.
Learn about personal loan rates.
How Insurance Companies Set Car Insurance Rates
Like health insurance, car insurance comes with both premiums and deductibles. The premiums are what you pay the insurance company every month to maintain your coverage. The deductible is what youâll pay when you start making claims, up to a certain annual cap of, say, $1,000.
Itâs worth noting that most people who say they want cheap car insurance mean that they want car insurance with low monthly premiums. But, as with health insurance, thereâs a risk to having a policy with low premiums and a high deductible. In the event of a serious accident, youâll have to meet that deductible. So, one way to get lower premiums is to opt for a higher deductible, but this is only a safe strategy if you have enough liquidity to cover your deductible in the event of an accident.
When car insurance companies set insurance premium rates they take several factors into account. These include applicantsâ age, gender and driving history, as well as the type of car the applicant drives and the driverâs state of residence. While you canât change your age, there are other steps you can take to get favorable rates from car insurance companies.
Types of Coverage
Insurance companies charge more for comprehensive car insurance than they do for basic coverage. In most states youâre required to have liability insurance to cover any damage you do to another car or driver. The extent of that coverage requirement varies by state. In most states, youâre not required to have insurance to cover damage to your own car, or injuries you might suffer in an accident.
If you choose to add insurance coverage for yourself, you can opt for comprehensive coverage or collision coverage. Collision coverage, as the name indicates, covers damage from an accident with another car or an object, and in the event that your car flips. Comprehensive coverage covers things like theft, vandalism and natural disasters, too.
So, while youâll almost definitely need to buy liability coverage to cover other driversâ damages, you might not need to buy physical damage coverage for your own vehicle. It will depend on the terms of your lease if youâre leasing a car, and on your own assessment of the risks you face.
If youâre buying a valuable new car, youâll probably want comprehensive coverage. If youâre paying cash for an older, used vehicle, you can probably get away with a more basic level of coverage. Whatever insurance option you choose for yourself, be sure to comply with state laws relating to liability insurance for any damage you might do to another driver. Once you have a car insurance policy, carry proof of insurance with you in your vehicle at all times.
How to Get Cheap Car Insurance Rates
In the long term, one of the best ways to get cheap car insurance is to be a safe, responsible driver. The worst drivers have high rates because the insurance company needs financial compensation for the high likelihood that it will have to pay out in the event these drivers get in an accident. If you have a spotless driving record, keep it up. If you have some accidents or tickets in your past, they shouldnât drive your rates up forever. If itâs been a few years since your last incident, you can try calling your insurance company and asking for a lower rate, using your recent, safe driving record as a bargaining chip.
Another way to get cheap car insurance is to use the same insurance company for more than one type of insurance and get a discount for your loyalty. For example, you can contact the insurance company that provides your homeowners insurance, life insurance or motorcycle insurance and ask if the company can give you a good deal on car insurance. If you have more than one car, you can bundle the insurance coverage on both vehicles.
Your credit score will also affect your car insurance rates, just like it affects the rates youâre offered when shopping for a mortgage. If your credit has improved since you last bought car insurance, you may be able to negotiate your way to cheaper car insurance. And if you pay your car insurance premiums and bills on time and in full, youâll build up goodwill with your insurer and might qualify for promotional rates.
If you donât drive very much during the year, you might get cheaper car insurance from a usage-based plan than you would from regular car insurance. Track your mileage before you start shopping for car insurance and see if your low mileage makes you eligible for a better deal.
If youâre under 25, youâll pay higher premiums, all things being equal. Thatâs because insurance companies judge young drivers to be riskier drivers. You can get lower rates by joining your parentsâ plan, or by using your good grades to get a discount on rates, if your insurance company offers that option. Once you reach your mid-20s thereâs no reason to keep paying the high rates that insurance companies levy on young drivers. You can ask your insurance company to lower your rate, or shop around for insurance from another provider.
Finally, the type of car you drive can affect your car insurance rates. Big, powerful and flashy cars are more likely to trigger high car insurance rates because the insurance company assumes youâll be more likely to speed in that kind of vehicle, and that the vehicle will be a target for theft. Vehicles with high repair costs (such as foreign-made cars) may be more expensive to cover, too. In some states, having a used car will mean lower rates because rates are affected by your carâs replacement value. But in other states, rates are based on vehiclesâ safety features, so having an older car wonât necessarily help you get cheap car insurance. If your car has special safety and/or anti-theft features, you may qualify for cheaper car insurance on that basis.
If you donât have a vehicle or youâre thinking about getting a new (or used) car, it may be worth doing some research to find out which kinds of cars will get you the lowest car insurance rates. And if youâre paying a lot for car insurance now, you may be able to get cheaper coverage by negotiating your premiums or switching providers.
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