Tag Archives: over financing a vehicle

Two Financial Mistakes We Keep Making

Almost every week, there’s another media story of a condo or apartment building fire, not to mention the huge destruction in Ft. McMurray. In almost every story you’ll hear that a lot of families lost everything, and didn’t have insurance.

Renters insurance costs around $100 or $200 and you really need to have it – or get it today! Your landlords insurance does not cover your stuff. If there’s a fire, you need to have your own coverage. If you don’t, you’re not just out everything you own, but are also liable for the landlord’s stuff in your rental. That includes the fridge, stove, any furniture, carpet, etc. Nobody ever thinks it’ll happen to them – until it does. That $100 or so will pay off huge in the event of a claim. You’re not insuring the building, but only the $10,000 or $20,000 of your content – that’s why it’s so inexpensive. If, on the other hand, you’re a landlord, give that heads up to your tenant. You can’t make them do it – but lack of knowledge shouldn’t be the reason they don’t have coverage.

The second financial mistake applies to hundreds of thousands of people: It’s over-financing their vehicles. In the event of a write-off, or theft of your vehicle, the insurance company will not pay off what you owe. That you over-financed it is your problem and not theirs. What you owe has nothing to do with what the insurance company will cover.

They’ll pay you the “fair market value” only. They insured the value of your vehicle, they didn’t insure the amount of your loan. If you’re buying a new one, buy something called full replacement for under $50 that’ll give you two or three years where they’ll replace it without depreciation. For everyone else, figure out what your loan amount is, then look on Autotrader to get a rough idea of your value. THAT value is close to what you’ll get from the insurance company. Hundreds of people a day are finding out that they’re short thousands of dollars to pay off their car loan. Don’t be one of them!