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At what point is it worth dropping collision insurance?
Posted on 4/21/16 at 9:52 am
Posted on 4/21/16 at 9:52 am
So I have one of the affected VW cars. The thread about how they may be buying back and offering money got me thinking about what I would do if I needed to buy another car. I commute a good bit for work, so I need a smaller car. I'm casually starting to look in case this happens. I have two options on extreme ends of the spectrum.
I can get into another similar sized note (which I'm currently almost finished paying), and use the money from this buyback to get a nicer higher end car and basically just extend my payments for 5 years.
Or, I can use the money from the sale to buy an older car cash and maybe pocket some money. Something around 7k or so. Then I can save up what I'd been paying in the note for a few years and re-visit the situation. An additional savings would be the possibility of dropping collision insurance. Car would be paid for and dropping collision would probably save me another 60 bucks a month. If I did get in an accident, losing out on 7k wouldn't break me. Just wondering what the typical opinion of where it's just no longer worth it usually lies.
I can get into another similar sized note (which I'm currently almost finished paying), and use the money from this buyback to get a nicer higher end car and basically just extend my payments for 5 years.
Or, I can use the money from the sale to buy an older car cash and maybe pocket some money. Something around 7k or so. Then I can save up what I'd been paying in the note for a few years and re-visit the situation. An additional savings would be the possibility of dropping collision insurance. Car would be paid for and dropping collision would probably save me another 60 bucks a month. If I did get in an accident, losing out on 7k wouldn't break me. Just wondering what the typical opinion of where it's just no longer worth it usually lies.
3
Posted on 4/21/16 at 10:13 am to KG6
quote:
Then I can save up what I'd been paying in the note for a few years and re-visit the situation
If you're just going to save the note each month to buy a new, more expensive car later, just buy it now. Cars aren't getting any cheaper
Buying a cheap car for cash now is basically just throwing money away since you won't sell it for as much as you paid for it. So you'd be better off just getting the other car now if you know that's what you're going to end up doing. ETA: This of course assumes you're still comfortable handling the note now.
This post was edited on 4/21/16 at 10:15 am
Posted on 4/21/16 at 10:17 am to LNCHBOX
quote:
If you're just going to save the note each month to buy a new, more expensive car later, just buy it now
First, I'd be saving the interest of taking out another loan (however small that is in the grand scheme of things). Second, I work in the oilfield. I'm safe for now, but you never know. I'm fine with the current note I carry, but it'd be even more of an ease on my mind if I didn't have a car note to worry about if I lost my job. Went from being note free on both vehicles by next year, to possible getting back into the beginning of a loan. The idea of no note is nice. So there is a benefit to getting out of a note all together.
Posted on 4/21/16 at 10:26 am to KG6
but keeping comprehensive?
or will you drop both?
or will you drop both?
Posted on 4/21/16 at 10:34 am to KG6
quote:
First, I'd be saving the interest of taking out another loan (however small that is in the grand scheme of things)
As low as the rates have been, you're likely talking about $1500 or less. You'll lose more than that on the inbetween car you get.
quote:
Second, I work in the oilfield. I'm safe for now, but you never know.
Extremely valid point, and was the reason I edited my first response. That would be my biggest concern if I were in your shoes.
Posted on 4/21/16 at 12:20 pm to KG6
quote:
Car would be paid for and dropping collision would probably save me another 60 bucks a month.
so is this a completely made up number on your part?
Posted on 4/21/16 at 12:51 pm to Chad504boy
quote:
so is this a completely made up number on your part?
I don't think you are talking anywhere near $60 per month, the difference isn't very significant IMO
I pay $350 insurance every 6 months for my 4runner (worth about 14k)....that's already less than $60. You are likely talking more like $15 a month IMO
Posted on 4/21/16 at 1:51 pm to CidCock
This is from my last bill. This is what I pay every 6 months for collision and comprehensive. I know it's high, but bundled with my homeowners, it came out alright. I save a little by paying in full every 6 months. So $60 was kind of made up, but if I went by the actual numbers, it's more like I'd be saving 74 bucks if I paid monthly
Posted on 4/22/16 at 8:07 am to KG6
I would keep collision. I see folks all the time that get into an accident with an uninsured driver and are left with nothing.
I'd also shop around as these numbers look high.
I'd also shop around as these numbers look high.
Posted on 4/22/16 at 8:51 am to Motorboat
quote:
I see folks all the time that get into an accident with an uninsured driver and are left with nothing.
I mean, that's kind of the point. If I were in an accident, even if it was my fault, my medical insurance would pay for any injuries. My car, let's say, is only worth $5k. Yes, I'm now out $5k, but is it worth the risk. At a certain point, it's just not worth carrying anymore statistically.
Yes, I've shopped around about 4 years ago and then a year ago. I can get a good bit cheaper through someone like Geico (currently Allstate), but then my homeowners shoots up a good bit. Basically, it's a wash if I use another company for cheaper auto and pay the higher home owners. But I'd rather do it all with one company, so I 've made the decision to pay the higher auto and go with Allstate. The collision and comprehensive is actually a major portion of the bill, so being able to cut it out would be a "big" savings.
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