How to Calculate How Much Your Auto Loan Payments Will Be

Sean Cooper |Aug 13, 2019
If you are looking to buy a new vehicle and think you'll need to take out a loan, this auto loan calculator will come in handy.
How to Calculate How Much Your Auto Loan Payments Will Be

How to Calculate How Much Your Auto Loan Payments Will Be

Sean Cooper |Aug 13, 2019

What Kind of Vehicle Can You Afford?

Welcome to The Finance Mastermind’s custom auto loan calculator. Are you considering purchasing a vehicle, but you can’t afford to pay for it in cash? There’s nothing wrong with taking out an auto loan. In fact, it can be a smart financial decision that can help you drive off the lot in your dream vehicle sooner.

By completing a few simple inputs in our auto loan calculator, such as the loan amount, the length of time and whether the vehicle is new or used, you can figure out how much your monthly auto loan amount would be to see if it’s affordable and makes sense.

In this article we’ll also look at refinancing your auto loan, gap insurance, how to avoid high interest, how to keep monthly payment down and more.

Basic Functions of the Custom Auto Loan Calculator

To get the most out of the custom auto loan calculator, you’ll need to fill in some basic information. Here are the fields.

  • How much you are looking to borrow: This is the total amount of money you need to borrow to purchase the vehicle. It’s the purchase price of the vehicle minus your down payment. The difference between those two figures is how much you’ll need to borrow as an auto loan to purchase the vehicle.
  • For how long: Auto loans are usually between two and eight years in length. However, try to limit yourself to a maximum of five years, otherwise you could end up in a situation of negative equity, where you owe money on a vehicle that no longer works.
  • If your vehicle is new or used: This is self-explanatory. Select whether your vehicle is new or second hand.
  • Your interest rate: This is the interest rate you’re being charged on the auto loan.

Once you enter the above information, the auto loan calculator will output the following helpful information.

  • Estimated monthly payments: This is the estimated amount you’re required to pay for the auto loan on a monthly basis. Make sure the payments fit within your budget. If the payments are too high, you might consider making a larger down payment or buying a cheaper vehicle.
  • Total principle paid: Each payment is made up of a portion of principal and interest. This is the total amount of principal you’ll pay over the life of the auto loan.
  • Total interest paid: This is the portion of interest you’ll pay over the life of the auto loan. The longer the length of the car loan and the higher the interest rate, the more this will be. By limiting both, you can save yourself some interest.

Refinancing

Do you currently have an auto loan, but you feel that the monthly payments are too high? Or perhaps you feel that the interest rate is too high. Refinancing your auto loan could help you save money. When you refinance your auto loan, you replace your existing one with a new auto loan that has different terms. You do that by paying off your existing auto loan with a new auto loan

There are several reasons you might want to refinance your auto loan. For instance, let’s say when you were approved you had bad credit. For that reason, it comes with a higher interest rate. But if your credit has improved since then, you could refinance your auto loan and save on interest with a lower interest rate. Instead of accepting a lower monthly payment, you could choose to keep your monthly payment the same and pay down your auto loan even more aggressively.

Another common reason to refinance your auto loan is to lower your monthly payment. For example, if you find the payments are unaffordable or you’re looking to qualify for a mortgage, but the auto loan payments are hurting your ability to qualify, you might consider refinancing. You can lower your monthly payments in a couple ways: by lowering the auto loan’s interest rate or by stretching it over a longer period. Just keep in mind that by stretching your auto loan out over a longer period you’ll pay more by way of interest over the life of the auto loan.

If someone has co-signed on your auto loan and you want to remove them, you might consider refinancing your auto loan. However, in order to be able to refinance you’d need to be able to qualify for the auto loan on your own.

These are just a few of the most common reasons why you might choose to refinance.

Interest Rates

Besides the auto loan amount, the interest rate has a major bearing on how much the auto loan will cost you over its lifetime. If you have a higher interest rate, you will end up paying more toward interest on your auto loan than toward the principal. Furthermore, having a higher interest rate on your auto loans means that you’ll qualify for a lesser auto loan amount.

The interest rate you pay on your auto loan depends on several factors, including your credit score, where interest rates are at and competition among lenders.

If you have a good credit score, you should have no problem getting an auto loan at the best interest rate available. However, if your credit score is damaged, you’ll likely have to pay a higher interest rate.

Likewise, where interest rates are at also has a bearing. For example, if interest rates are currently high, you’ll likely have to pay a higher interest rate on your auto loan than at a time when interest rates are low.

Competition can also influence the interest rates on your auto loan. All things considered equal, the more competition among auto loan lenders, the more likely the interest rate is to be lower.

Gap Insurance

Gap insurance is an optional type of auto insurance you may have heard of. Gap insurance, short for guaranteed auto/asset protection, protects you in case your vehicle is stolen or totaled. It’s also referred to as gap protection, because it covers the gap between what your car is worth and the amount you owe on your auto loan.

Gap insurance comes in handy in situations where your auto loan amount is greater than the market value of your vehicle. Auto dealerships usually offer it when you’re buying a new car.

Gap insurance is often an overlooked type of insurance coverage, but it can come in handy in certain instances. For example, when you buy a new car, it almost always loses value the moment you drive it off the lot. This creates a gap right off the bat between how much the car is worth and the amount of your auto loan.

Some vehicles don’t hold their value as well as others. If you own a vehicle that depreciates quickly, it can put you in a negative equity situation.
If you stretch your auto loan out over seven or eight years, this has the potential to create a gap between your auto loan and your vehicle’s value.

For the three reasons mentioned above, you might consider signing up for gap insurance to protect yourself.

Understanding the Break-even Point

It’s not a pleasant situation to be shopping for a new car when you owe more on your existing one than it’s worth. The break-even point of an auto loan refers to when your vehicle’s trade-in value is roughly the same as the amount that is currently outstanding on your auto loan.

If you trade in your car before the break-even point, you could end up having to fork over some of the money from your savings to cover the auto loan. Why? Because you might owe more on your loan than your car sold for.

If you’re financing a new vehicle, the break-even point usually occurs four or five years in with most auto loans. By knowing the break-even point, you can decide when is the best time to sell or trade in your vehicle.

How to Avoid High Interest

The simplest way to avoid high interest is to negotiate a lower interest rate, and to shop around for the best auto loan.

By negotiating a lower interest rate, more money of every auto loan payment will go toward principal and less toward interest. This in turn will help you pay off your auto loan sooner.

It’s also a good idea to shop around. Don’t simply go with a dealership or car company for your auto loan because it’s the most convenient. See what else is out there and try to negotiate a better deal.

If your credit score is an issue and you don’t plan to apply for an auto loan for a while, you can take steps to improve it. By doing that, your credit score can be better when you apply for an auto loan, helping you negotiate a lower interest rate.

How to Keep Monthly Payments Down

You can keep your monthly payments down on your auto loan in three simple ways: by making a larger down payment, negotiating a lower interest rate or by stretching your auto loan out over a longer period.

If you can afford to, you might consider making a larger down payment on your vehicle. When you do that the monthly payment on your auto loan will be lower since you’re borrowing a lower amount.

Another way to keep your monthly payment down is by negotiation a lower interest rate on your auto loan. By shopping around on your auto loan and negotiating, you can get a lower interest rate.

Last, but no least, you can stretch your auto loan over a longer period. This can make sense if you’re qualifying for a mortgage, but the high monthly payment on your auto loan is preventing you from qualifying for as much as you had hoped. Before doing this, be sure to consider how much more in total interest it will cost you by stretching out the auto loan over a longer period to make sure it makes sense.

Banks versus Dealerships

When it comes to taking out an auto loan, you can go through your bank or the dealership/car company. Whether it makes sense to go through one over the other depends on the auto loan terms being offered.

My best advice is to shop around. A dealership or car company is a good first stop for financing, but it shouldn’t be your only stop. By shopping around at banks, you can see what else is being offered.

If you’d prefer to take out your auto financing with your bank, but you’re being offered a better deal from the auto dealership, you might consider showing your bank the better deal you’re being offered. Your bank may in turn be willing to match it. The bottom line is that you have nothing to lose by shopping around.

Getting Pre-qualified

Before shopping for a vehicle, it’s a good idea to get pre-qualified. Getting pre-qualified on a vehicle is a lot like getting pre-qualified on a home. When you get pre-qualified for a vehicle, the bank or dealership looks at your income, down payment, credit score and any other debt you might have (i.e. credit cards, student debt, mortgage, etc.). Based on this, you’ll find out how much you qualify to spend on a vehicle.

It’s important to keep in mind that just because you qualify to spend a certain amount on a vehicle, it doesn’t mean you should spend that much. Find out what the monthly payments would be and how much interest it would cost you over the life of the auto loan and see if you’re comfortable before taking out an auto loan for this amount.

Co-signing Tips and Considerations

If you’re having difficulty qualifying for an auto loan, you might consider getting a co-signer. A co-signer is someone who helps you qualify for an auto loan. The co-signer’s income, down payment and credit score are all considered when approving the auto loan.

As such, you’ll want to look for someone who is strong in all those areas. For example, if your uncle has a lower credit score than you, it probably doesn’t make sense for him to co-sign, but if he has a better credit score than you, that’s when it can help your auto loan application get approved.

If you’re thinking about co-signing for someone on an auto loan, before signing on the dotted line, make sure it’s someone you trust. If the individual you’re co-signing for were to miss any of the auto loan payments, it will be as if you missed the payments yourself.

Not only that, you’ll be responsible for making those payments. Being asked to co-sign on an auto loan isn’t a decision to be taken lightly. It’s important to sit down with the individual and make sure you both are on the same page and understand each other’s role and responsibilities. The last thing you’d want is the co-signing of an auto loan to ruin your relationship.

Factoring in Taxes and Fees

When buying a vehicle, it’s important not to overlook taxes and fees. Taxes and fees are the so-called hidden costs of buying a vehicle. Taxes and fees will depend on the state you’re in buying in, so it’s a good idea to ask about them ahead of time and do your homework.

You may be required to pay the taxes and fees out of pocket, or you may be able to roll them into the auto loan. If you’re required to pay them out of pocket, you’ll want to hold some money back from the down payment on your auto loan, so you have enough money to cover them.

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Everything You Need to Know About Filing Your Own Taxes

Katie Macomb | August 13, 2019

It's Not Fun, but It Has to be Done Benjamin Franklin wrote a 1789 letter that states, “But in this world nothing can be said to be certain, except death and taxes.” Even at the United States’ early beginnings, federal taxes were a necessary evil to fund various public projects and administrative costs. Today, federal taxes serve much of the same purpose. While virtually no one likes to prepare and file their taxes, it is a necessity if you want to avoid fines and further hassle. It is no secret that preparing and filing your taxes is notoriously complicated. Many people lament that it should not be so difficult to pay the government. However, some of the complications allow people to save money if they discover specific tax benefits. Knowing how to file your own taxes may be a good option if your tax situation is relatively straightforward, or if you are willing to learn the process. Why Do You Need to File Your Taxes Every Year? The short answer is that federal law requires that most individuals file taxes annually. Income taxes are assessed every year based on your income earned during that period. You then pay a percentage of that income to the government, less any deductions, adjustments, or credits that you qualify to receive. If you do not file (and pay) your taxes, then you may be assessed penalties and interest. The Internal Revenue Service (IRS) can even go as far as garnishing your wages and repossessing your property if you do not file and pay as required. The Benefits of Filing Your Own Taxes If you are one of the 43% of Americans that are doing your own taxes, you are certainly not alone. Roughly 53 million people prepared and filed their own taxes in 2018. There are many benefits to filing your own taxes, including: Saving money: Hiring a tax professional is expensive, and many people can prepare and file their returns on their own, completely free of charge. Control: Some people like knowing the exact information that is included in their return and being able to control the data, and for some, knowing precisely how the numbers work out, is comforting. Gain helpful information: When you prepare your taxes, you can see what items saved you money this year or which issues you should address so you can save money next year. While filing your own taxes is complicated, it can be beneficial under the right circumstances. There are several programs online that walk you through the process to help ensure you are taking advantage of all of your available deductions and credits. The Drawbacks of Filing Your Own Taxes In addition to the benefits, there are also some disadvantages to filing your own taxes. These include: Time and effort: Preparing and filing your taxes takes time and work You have to sift through financial information and deal with concepts that you may not understand well. The process can be frustrating and take a considerable amount of time. Error risk: If you do not completely understand how your taxes work, you run the risk of making a mistake because of misconceptions. If that happens, it could lead to underpayment and audits down the road. Questions: Even if you use a tax preparation software, you may still have questions that will remain unanswered unless you do significant research or reach out to a tax professional. For some people, the risk of having a substantial error that triggers the IRS’s attention is enough to scare them away from preparing their own taxes. Preparing for Filing Your Taxes When you begin work on your taxes, you should have information gathered throughout the year. Some of the most common items that you will need include: Social Security numbers for you, your spouse, and any dependents Information about wages, such as W2s or 1099s Investment income information Documents that represent any other source of income Information regarding adjustments to income, such as student loan interest paid, IRA contributions, and health savings account contributions, just to name a few Information regarding potential credits, including, for example, child care expenses, education expenses, or retirement savings contributions Data about any tax payments that you may have made throughout the year Keeping good records will help make tax preparation easier at the beginning of the year. [youmaylike] The Basics About What You Can Claim When Filing You must pay income taxes on all your income earned throughout the year. However, that income is reduced by a few things. The further you can reduce your taxable income, the less you tax you will pay. There are three general categories of tax reduction methods: Standard or Itemized Deductions Everyone can claim either the standard or itemized deductions. Standard deductions are a set amount that is based on your filing status. Itemized deductions are based on actual expenses that you incurred throughout the year. You can choose to use the higher deduction. The higher the deduction, the less tax you will have to pay on your income because your income decreases on paper. Itemized deductions include things like medical expenses, state and local tax payments, and home mortgage interest deductions. Itemized deductions will only decrease your income by a certain percentage, or up to a specific point. Adjustments Some adjustments to your income may also be available. These include things like paying student loan interest or alimony. Adjustments are more valuable compared to deductions because they decrease your income dollar for dollar. Credits A credit decreases your taxable income as well. Some credits are refundable while others are not. For example, you get a child tax credit simply for having children that qualify for that credit, but that credit will not be paid out to you if you do not have any tax obligations. On the other hand, the Earned Income Credit, which is available for low-income filers, will be refunded to you even if you do not owe any taxes. There are a wide variety of deductions and credits available. Take a look at the federal forms and related schedules to determine whether you might qualify for any of these. How to File Your Own Taxes If You Live Overseas If you earned income in the United States as a U.S. citizen or resident alien, you likely need to pay taxes on that income. This is true even if you live overseas. You can still choose to e-file or mail your tax return to the IRS once you have it prepared, just as if you physically lived in the United States. In some cases, you will be taxed on the income that you earned throughout the world. However, you may be able to deduct a portion or all of the revenue that was not made in the United States in some circumstances. Filing Online The IRS offers an online filing option that is free for individuals that have an adjusted gross income below a specific threshold. Generally, your income must be below $66,000 to qualify for this service. You can also file online by using a commercial tax preparation software. Examples of this type of software include: H&R Block TurboTax TaxCut TaxSlayer There are many programs available that will file your taxes for you, often for a fee. Knowing how to file your own taxes can be a great way to save money, but it can be tricky as well. If you want to file your taxes yourself, be sure to read the form instructions thoroughly and get familiar with various tax saving opportunities before you begin preparing your return.

5 of the Best Investment Apps for Beginners

Stephanie Colestock | August 13, 2019

Make Investing Simple Whether you’re putting away your first $1,000 or have been saving for the future for years, you’re going to want to consider investing your funds at some point. Doing so will allow you to maximize returns and exponentially grow your savings. Unfortunately, the investment process can be pretty intimidating, especially if you are starting out on your own. It’s hard to know how to begin, where to invest, how to balance your portfolio and even what sort of fees you should expect to pay along the way. That’s where the convenience and ease of today’s best investment apps can come into play. What Are Investment Apps? Once upon a time, your only choice for investing was to pick up the phone and call your stock broker to initiate a trade. You were charged for the service, either based on commission or as a flat fee per transaction. While stock brokers are still an option, you can take investing into your own hands these days, without ever needing to talk to another human. And it’s all thanks to investment apps and platforms. Today’s apps offer a range of services and features. With them, users can: Research funds and individual stocks View fees and expenses related to investment choices Invest funds on-the-go, and even automate regular contributions Automatically reinvest earnings on current investments Adjust portfolio for personal risk tolerance View performance projections Choose funds or individual stocks that align with personal beliefs, through portfolios based on socially-responsible missions The best part? Investing through trusted apps is usually cheaper, faster and you’ll have instant access to your portfolio/reports at any time of day. Not only that, but you’ll also be able to set your investment risk tolerance, rebalance your portfolio and even reinvest earnings automatically. Who Are Investment Apps Designed For? Whether you’ve been playing the market for ages or are ready to invest your first $100, the right investment app is worth considering. For those new to the stock market, apps will simplify the process and put the power of investing at your fingertips… literally. From your phone or computer, you can easily see portfolio recommendations based on your own goals, savings plans and even risk tolerances. The right app will tell you up front how much you can expect to spend in fees throughout the year, and can even allow you to automate many of the more confusing aspects, such as picking well-performing stocks or even rebalancing. While investment apps are ideal for beginners, newbies aren’t the only ones who will see the benefits. Even seasoned investors will find the process easy to use, and may even learn that these platforms can maximize returns (and save them money in fees) along the way. Not to mention, many investment apps offer additional insight into specific funds, so you can choose to invest in companies that align with your own passions and beliefs. Now that you know why you should consider using an investment app for your own savings, let’s take a look at some of the best ones available today. Best Investment Apps Great for Beginners: Acorns Fees and Expenses: For investors with less than $1 million invested, fees are between $1-3 per month depending on the account option you choose. Acorns is also free for college students. Beginning Investment Requirement: At least $5 to start Types of Investments Available: ETFs (exchange-traded funds) Portfolio Options: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive Automatic Investing?: Yes Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes If you want an easy, hands-off approach to investing that won’t leave your head spinning, Acorns is a great first choice. This app not only simplifies investing for beginners, but allows investors to completely automate the process from start to finish. After connecting the app to your debit card, the app will “round up” each of your daily purchases, putting the savings into an investment holding account. Once you reach the minimum required, Acorns will invest this money on your behalf, based on your account preferences. The app will also reinvest your earnings, as well as rebalance your portfolio when necessary. [youmaylike] Great for Truly Free Investing: Robinhood Fees and Expenses: Robinhood is a free investment platform in every sense of the word, pledging to never charge company fees or commissions to customers. Beginning Investment Requirement: You’ll need $2,000 to get started Types of Investments Available: ETFs, stocks, cryptocurrency and options Portfolio Options: Interest-based options such as Fashion ETF, Tech ETF and Energy ETF, as well as a standard S&P 500 ETF, all with personal risk tolerance settings. You’ll also find “collections,” which are individual stocks grouped according to specific interests — such as companies with female CEOs or that are in the social media sector. Automatic Investing?: No Automatic Reinvesting?: No Automatic Rebalancing?: Yes A great option for beginners and experienced investors alike, Robinhood makes the process both easy and affordable. How affordable? Well, it’s entirely free. By offering a truly free experience, Robinhood saves investors some serious cash over time. Additionally, the platform makes it easy to choose individual stocks or ETFs based on personal interests. If you want to invest in cryptocurrency or options, you can also do so through Robinhood. One of the biggest limitations of the platform, though, is its automation. While you can set up automatic deposits into your account, you will need to manually invest those funds and then reinvest (or withdraw) your dividends. Stash Fees and Expenses: $1 per month fee for those with less than $5,000 invested, or $2 per month for retirement accounts with less than $5,000. For users under 25, fees on retirement accounts are waived. If you have more than $5,000 invested, your fee will be 0.25% annually. Beginning Investment Requirement: You’ll need at least $5 to begin investing (fractional shares are available) Types of Investments Available: ETFs (exchange-traded funds) and fractional stock shares Portfolio Options: Too many to name, ranging from things you Want (portfolios that are conservative to aggressive mixes), things you Believe (such as groups of companies that believe in clean energy, LGBT rights, etc.), and things you Like (tech, retail and social media companies). Automatic Investing?: Yes Automatic Reinvesting?: No Automatic Rebalancing?: No The closest competitor to Acorns, Stash seeks to make investing easy for everyone, regardless of your goals and passions. They have three account options to choose from, allowing you to manage your investment and retirement accounts, or even a child’s education savings through custodial accounts. With Auto-Stash, you can set any number of automatic investment options and transfers. However, Stash will not rebalance your portfolio for you, nor will they reinvest dividends on your behalf. Wealthfront Fees and Expenses: 0.25% annually Beginning Investment Requirement: $500 minimum initial investment Types of Investments Available: ETFs (exchange-traded funds), individual stocks, retirement accounts (401k, IRA), 529 savings plans, trusts Portfolio Options: 11 asset classes to choose from, including natural resources and real estate Automatic Investing?: Yes Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes Wealthfront’s investment platform is designed to be friendly for users of all experience levels. If you’re a seasoned investor, you’ll enjoy all of the options available to you, including the ability to manage your retirement accounts, education savings, and even non-profits or trusts. If you’re a newbie, their free financial expertise center is the perfect place to learn all about investing and your future. TD Ameritrade Fees and Expenses: The managed, automatic portfolio investment option (called Essential Portfolios) is available with a 0.30% advisory fee Beginning Investment Requirement: $5,000 minimum for managed portfolios (no minimum requirement for traditional trading) Types of Investments Available: Stocks, ETFs, options, mutual funds, futures, bonds/CDs, Forex, cryptocurrency Portfolio Options: Essential Portfolios (EP) offer investors a range of options from Conservative to Aggressive, based on your individual passions, preferences and tolerances Automatic Investing?: Yes, with EP Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes A more traditional brokerage app, TD Ameritrade is one of the most recognizable names in the industry. You can easily educate yourself on all things financial, thanks to their free videos and posts. If you want a traditional experience, you can choose your trades and pay per transaction. Prefer a more streamlined, automated approach? Opt for their Essential Portfolios, a hands-off investment option (robo-advisor) that charges a flat monthly fee and requires little-to-no oversight from you. Plus, their app makes the investing process easier than ever with a user-friendly interface, price alerts and no minimum to get started. If you prefer a desktop experience, this is also available to you through TD Ameritrade. Bottom Line Getting started with investing can be intimidating. With all of the terminology and account options out there, it’s easy to want to run and hide. Thanks to some of today’s best investment apps, though, you can not only get started with your first portfolio but also watch your money quickly grow… no matter how much of a beginner you may be! It’s important to choose an app that offers you the portfolio options and features you want most, with fees and deposit minimums that match your financial needs. The five apps above are our favorites for beginners, making that first foray into investing easier than ever before. The hardest part will be choosing the one you love most!

5 of the Best Auto Insurance Companies

Eric Bank | August 13, 2019

Protect Against Collisions and More If you drive a car in the United States, liability insurance must cover it. This type of policy pays for medical and property damage resulting from a vehicular accident. You can also purchase comprehensive and collision insurance to cover other costs. These additional coverages help protect the value of your car should it be damaged. If you are calculating how much it will cost to buy a car, you need to take into consideration the cost of insurance as well. In this article, we’ll review the basics of car insurance and the best auto insurance companies in America, including costs, pros and cons. This is a brief introduction to automobile coverage. Liability Coverage When an accident occurs, liability insurance covers you, household members and authorized drivers for the costs associated with property damage and bodily injury. It covers the cost to repair or replace property damage that you caused. You are also covered if you cause the bodily harm or death of someone else while you are driving the car. This includes medical expenses, loss of income and specified legal defense costs. Collision Insurance If you are involved in a collision, this type of insurance will help pay for repairing or replacing your vehicle. If the collision is your fault, the coverage may extend to other damaged vehicles involved in the accident. States do not mandate that you buy collision insurance, but your lender or car dealer will if you finance or lease the car. Policies offer a range of deductibles, which is how much you’ll have to pay for repairs before the insurance kicks in. Larger deductibles lower the policy premiums but expose you to more out-of-pocket expenses if a collision occurs. Comprehensive Insurance Comprehensive insurance covers damage to your car that occurs for reasons other than a collision, including theft, fire, vandalism, weather and natural disasters. This coverage is often required if you finance your automobile. You can add riders to this insurance to provide coverage of additional costs, including auto towing, glass repair, daily rental while your car is in the shop and emergency roadside service. As with collision insurance, you can set the deductible on your comprehensive insurance policy to cut your premium costs. Gap Insurance If your car is severely damaged in an accident or other incident, you might find that your comprehensive and collision damage won’t provide enough coverage to pay off the amount you owe on the vehicle. Many policies pay only the fair market value of a totaled car, which might be only 80% of the amount you owe. You can buy additional insurance to plug this gap and ensure you can pay off the car loan in full if the vehicle is destroyed or stolen. Normally, car leases require you to buy gap insurance. If you pay cash or pay off your loan, you can save money by avoiding or dropping gap insurance when no longer needed. Top Five Auto Insurers These five insurers all offer full coverage policies and many additional services. Amica Amica is a superstar among car insurers, winning accolades from Consumer Reports and J.D. Powers. It’s known for handling the claims process smoothly. Average annual cost for full coverage: $1,360. Pros You can have your car repaired at any body shop, without restrictions. Offers a premium package which, for additional cost, provides full glass coverage, rental coverage, good driving rewards and identity fraud monitoring. Superior financial stability rating from A.M. Best. Cons Missing some discounts, such as military, low-mileage and prepay discounts. Must speak on phone to get a quote. Sparse website when it comes to customer education. [youmaylike] State Farm State Farm is the country’s largest multi-line insurance company. It excels in customer service and regularly garners high marks from customers. Average annual cost for full coverage: $1,337. Pros Superior financial stability rating from A.M. Best. Excellent online quote tool, getting customers a quote in as little as five minutes. Easy claim handling and top service from its more than 18,000 agents and its easy-to-use mobile app. Cons Doesn’t offer coverage for new car replacement or uninsured motorists. Missing prepayment and automatic payment discounts. The Hartford While only 11th in size, the Hartford is big when it comes to policy options. It offers rates based on your actual driving as well as full-replacement of new cars when destroyed shortly after purchase. Average annual cost for full coverage: N/A. Pros Solid benefits, including superior roadside assistance and towing programs. High marks from customers for their purchase experiences. One of the few insurers with mechanical breakdown coverage for out-of-warranty repairs. Cons Mediocre service interaction according to J.D. Power surveys. Sparse online learning materials. Geico Geico is the second-largest U.S. car insurer. It is a favorite among tech-savvy geeks who appreciate the insurer’s mobile app and excellent online service. Average annual cost for full coverage: $1,627. Pros Geico offers plenty of ways to save, such as multi-vehicle, driving history and vehicle safety equipment discounts. Special savings for active and retired military members and federal employees. Full-featured mobile app for getting quotes, buying insurance, managing your policy, submitting claims, summoning roadside assistance and making payments. Cons Human help may be in short supply, as just about everything is handled online. No gap insurance offered. USAA No insurer matches USAA for service to military members. Unfortunately, it's only available to active service members, their families and retired veterans. Average annual cost for full coverage: $896. Pros Superior financial stability rating from A.M. Best. Top-ranked purchase experience score from J.D. Power. Cons Missing gap coverage. Doesn’t offer interior vehicle coverage or new car replacement coverage. Limited availability. The Right One for You Competition in the insurance industry helps drive down prices and prompts insurers to offer money-saving features. For example, your carrier might reward you for a safe driving record and for having a long-term relationship with the insurer. The right insurer for you is one that is highly rated for service, offers the exact coverage you want and does so at an unbeatable price. You should always gather multiple quotes before selecting an insurer, and make sure you get credit for all applicable discounts.

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How to Apply for a Business Credit Card

Myles Leva | August 13, 2019

Paying for Business Expenses Applying for a business credit card is something a small business should seriously consider for itself. Business credit cards can provide a range of benefits to a business. They allow a company to build up credit for better borrowing conditions down the road. They’re also quite easy to apply for. In this article we’ll go over how to apply for a business credit card and other important points to note. What Is a Business Credit Card? A business credit card is a credit card that is intended for business expenses. These cards are not meant for any individual’s personal use, but they are available to businesses of all sizes. What Is a Business Credit Card Used For? Business credit cards are meant for business expenses, and as such, they come with several perks that you wouldn’t get with a normal credit card. Business credit cards typically have far higher credit limits than normal cards, but they are also harder to qualify for. As a business phenomenon, business credit cards vary their offers greatly, and certain cards are meant for certain businesses. They are also highly customizable when it comes to individual payment terms. Businesses don't always have consistent incomes like individuals do, and business credit cards handle this problem. These cards are used to gain access to a long line of credit, to control employee spending on business expenses and more. One of their other common uses is to make accounting easier, as putting all business expenses on one separate account definitely makes reporting to the Internal Revenue Service easier. In the end, there are many uses for a business credit card. Why Would I Need a Business Credit Card? You might not need one, but if you run a business, you’ll be leaving money on the table by not at least looking into them. Business credit cards can solve many of the problems business owners face. [seealso] [youmaylike] If you need employees to make purchases for the business, a business credit card is the safest option. These cards can be given to authorized users, a status you can easily give to any of your employees. From here, these cards make it easy to monitor employee spending and spot any discrepancies. You can attach customized user privileges to each card to limit spending and place limits on where the card can be used. As mentioned, if you feel like your credit is too limited, business credit cards are a sure way around low credit. According to the American Bankers Association, the average monthly payment on a business credit card is twice as high as the average payment on a normal one. If you’ve found yourself annoyed with the Internal Revenue Service over the complicated reporting processes for business owners, you’re not alone. This is where a business credit card can solve another problem. Simply handing over your business credit card statements to your accountant will make them love you. It will also provide them with the information they need to predict future spending. Another great use for a business credit card is lifting your liability for debts. Liability for credit card debt is determined by the liability offered by the card. If you’re using a personal credit card for business expenses, you are liable for all debts. On the other hand, if you use a business credit card with commercial liability, your business is liable for any debts, which changes the game. Keep in mind that some cards offer joint liability, which leaves both you and your business liable for any debts. Make sure you know what you’re getting into before signing any paperwork. Lastly, just as personal credit cards offer rewards programs, so do business cards. The main difference here is that business credit card rewards are tailored to your business needs. How to Apply for a Business Credit Card Before you apply for a business credit card, you should make sure you’re eligible. For the most part, you only require the following to be able to apply for one: A legal name for your business. A business structure to apply with, such as a Limited Liability Corporation. An explanation of the nature of your business. You’ll typically be given a list of industry types to choose from. A tax ID number issued by the Internal Revenue Service Your roll in the business you’re representing Various business/financial information including: Annual revenue Number of employees Length of time in business Estimated monthly expenses If you have this information ready, you can apply for a business credit card. At this point, it would be wise to shop around and find the best option for your business. Your decision in the business credit card you choose will have larger ramifications than your choice in a personal credit card. Applying for a business credit card is much the same as applying for a personal one. There are a few differences, but the main thing to remember is that business credit cards are taken more seriously than normal ones, so you’ll have to face a higher bar of entry. This doesn’t mean getting a business credit card is hard, but it does mean you need to arrive more well-prepared than you normally would. To make things easier, you can prepare for certain obstacles in advance. You may need to sign a personal guarantee that you will pay off any debts. Also keep in mind that if you’re the one applying for a business credit card, and your business doesn’t already have one, they will conduct a personal credit check. It may be best to try to optimize your personal credit if you plan on applying for a business credit card in the future. Some Options at a Glance Here are some of the most popular options for small business credit cards: Chase Inc Business Preferred This is a great option for a few reasons. With the Business Preferred card from Chase Inc, you get 80,000 ultimate reward points when you spend $5,000 with the card in the first three months. The card also provides generic, but highly-useful benefits for business owners. Business Platinum Card from American Express The Business Platinum is ideal for businesses that spend a lot on flights and travel. This card offers numerous rewards on flight and hotel expenses and makes sure you get something serious back if you use it for these expenses. Chase Inc Business Unlimited The Chase Inc Business Unlimited offers unlimited 1.5% cash back. While we’ve said enough already, they also offer several other perks that are overshadowed by their first one.

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