Understanding your Auto Insurance Coverage November 27, 2009

If you merely search for “understanding auto insurance” and “auto insurance facts” on the Internet, you may find a good, two-paragraph summary somewhere, or you may just get buried under about 4,300,000 hits (which the first phrase brought up on Google). Besides the many thousands that mention all kinds of companies or coverage types, you will also have to wade through many more thousands of sales pitches just to get decent definitions of liability, collision, medical coverage, deductibles, driving records and common policy limitations. This article will fight the tendency to “Internet overkill,” and hit the important points for you.

The most important point, of course, is to read your existing policy thoroughly. If you are shopping for coverage for the first time, take the following suggestions to heart, and continue your research in a targeted, effective manner. In fact, if you are in the market for auto insurance, one of the best approaches is to get yourself educated enough so that you can understand what you are being told, and then let a few insurance websites or local agents compete for your business.

Liability first

There’s one old question about auto insurance that you need to examine in the light of your precise situation. “Coverage, coverage and more coverage – can you ever have too much?” Some people don’t think so, not with the lawsuit-happy citizens of these United States, at any rate. However, you have to be realistic and strike a balance between “coverage, coverage, coverage” and cost, cost, cost! Therefore, cover yourself in the right order.

Without a doubt, liability coverage is the most important because it covers three major components, namely, other people’s bodily injury and property damage, plus uninsured motorists. This coverage protects you against loss if you should injure someone, if someone with no liability insurance injures you and also covers your damages if the other party is underinsured. This is by far the most important coverage, and is the minimum required in most states unless there is another lien holder on your auto.

Other terms and concepts

If the bank owns your car, you will probably be required to have complete coverage including collision, which insures the auto itself and covers repairs. Other coverage includes personal injury, which covers your passengers, and medical coverage, which pays for medical and funeral expenses for you or anyone injured in a covered accident. Your deductible also plays a part in your coverage, and a higher deductible means that you pay a lower premium, but keep in mind that in the event of an accident the deductible comes off the top of the amount you get to fix your vehicle.

Some carriers will pay for rental of a vehicle while yours is being repaired. Like any other coverage, this has to be specified in your policy, and if it is not in the policy, it is not part of your coverage, regardless of what any insurance salesman says. In addition, there are details about your car, your amount of driving, etc., that can affect your rate, including where you live. On the plus side, you can usually expect discounts for a good driving record, anti-theft devices, etc., so make sure you mention all of these when requesting a rate quote.

The numbers game

Liability and medical coverage amounts are often expressed in confusing terms (such as “10/15/30”) that refer to the amount in thousands of dollars for certain parts of the coverage. To further complicate matters, the numbers are sometimes given as “per incident” or as the total amount payable under the policy. Make sure that you understand exactly what the dollar limits are, how they are applied, what the “per-incident” and “lifetime total” amounts are, and how the figures relate to the historic experience of drivers like yourself.

You can read various articles on the Internet, like this one and others both more and less specific, to get yourself up to speed before getting some rate quotes. Talk to a few insurance agents, register at a few websites and don’t be afraid to ask questions when you don’t understand a term, a concept or (perhaps most importantly) a dollar figure. It is as unwise to over insure your car as it is to under insure it, so take the time to get the facts.

You should also check with your state’s insurance commissioner to discover what the minimum insurance requirements are for where you live. It is, of course, always wise to educate yourself as much as possible in matters of this importance. If you are still unclear about auto insurance, your state department of insurance should be able to provide you additional help.

ClickInsure.com is a leading broker for health, life and auto insurance in California.  When you need great advice or want to compare auto insurance quotes be sure to visit ClickInsure.com.

Debt-To-Income Ratio – How Much Debt Can You Handle? November 27, 2009

Debt-to income ratio is a financial indicator that helps lenders to ascertain your credibility. Depending on the debt income ratio, a lender decides whether you should be given loan or not. It also evaluates the amount of debt that can be handled by you. Lenders fear losing their money.

 

They have become exceedingly cautious and are approving loans only if consumers are financially responsible. This is where the role of debt income comes into play. In addition to your debt-to income ratio or DTI, credit score is another number that represents your financial responsibility.

Lenders have played a very instrumental role in igniting the subprime mortgage crisis. They approved mortgage loans to borrowers who didn’t qualify for one.

This was done by manipulating income of borrowers, furnishing forged documents of property appraisals to help borrowers qualify for a mortgage. The credit crunch or recession is the outcome of the same.

It is an aftermath of irresponsible lending that has devastated the American economy.

 

Debt-to income ratio has 2 ratios- the front ratio and the back ratio. The front ratio indicates your housing costs. It basically takes into consideration the PITI, the principal, interest rate, insurance as well as taxes.

The back ratio indicates the payments you make for your other debts. This includes credit cards, child support, alimony, student loans etc. It also includes the expenses that are mentioned in the front ratio. A debt-to income ratio of 28/36 is considered a standard. The FHA or Federal Housing Administration allows a debt income ratio of 29/41 to qualify for a loan.

Maintaining a debt income ratio allows you to enjoy several financial benefits that the lenders offer.

The same is with your credit score. If you have a good credit score and a good debt-to income ratio, you are a lender’s favorite.

Cash Out refinance November 20, 2009

If you have any existing loan and you want to take out some cash from the equity you made then it will be considered as cash out refinance. The new loan balance will consist of the current loan and the desired cash-out money.

There are two ways by which a borrower can do cash-out refinance. They can use the home equity line of credit which is known as HELOC, behind the first mortgage they are having or they can refinance their existing mortgage into one or two loans.

Let’s have a look on the following examples where a borrower wants to have $100000 as cash-out from their home:

Home value: $500,000
Existing liens: $300,000 (We can say current loan balance)
Equity: $200,000 (The borrower has paid this amount)

In the above mentioned example total home value is $500000 and the borrower has paid $200000. That means total amount of equity is $200000. So the loan balance is $300000 which the borrowers need to pay off. If the borrower wants to utilize the home equity which is $200000 then the borrower can execute cash out refinance. As I told about this earlier, that a borrower can do this in two ways.

Let’s have a look on the above example assuming that the homeowner has added a second mortgage:

Home value: $500,000
Existing liens: $400,000 ($300,000 1st mortgage, $100,000 2nd Heloc)
Equity: $100,000

In the above example the homeowner has taken a 2nd mortgage behind their existing mortgage which is of $300000. When they took 2nd mortgage of $100000 automatically it increases the loan amount to $400000 and subsequently lowers their home equity to $100000. But the homeowner now can use the $100000 credit line for whatever he wishes.

Now let’s look at the same example and assume that the borrower went for cash out refinance but he did not take any separate loan that means he chooses cash out refinance with single loan.

Home value: $500,000
Existing liens: $400,000 ($400,000 1st mortgage, no 2nd mortgage)
Equity: $100,000

In this example the homeowner refinanced his original $300000 loan and added the cash out money to it that is $100000. So now his total loan amount is $400000. In the both the cases cash out amount and the equity is same. The only difference is here the borrower is taking a single loan may be a completely new mortgage with new lender or new bank with new rate and terms and condition.

So which option you should choose the first one or the 2nd one. If the interest rate is higher then you should go for second mortgage option. Then you first mortgage will not be affected due to high rate of interest.

If you see that interest rate is low then you should go for single mortgage option. Then you will get advantage as your first mortgage loan will also get the facility of low interest rate and for that you will have to pay lesser amount.

payday loans, compare loans, unsecured loan, personal loans choose the best November 7, 2009

You were certainly in the situation that you had no money, but the day when you get your salary was not even close.

You were certainly in the situation that you had no money, but the day when you get your salary was not even close. It happens with everybody. You had to spend money on something, had a bigger bill or lost your money. These events can happen very easily and can let you without money.

Don’t get scared, there is a solution for such cases. You can always count on payday loans. A payday loan means that you borrow the money until your next payday. The loaners don’t care about what you need the money for, they simply give it to you and you pay it back when you get your salary.

If we want to compare loans, a payday loan can be called an unsecured loan. This means that it has no collateral, you simply get the money. It’s logical, because you borrow only small amounts of money and you give them back soon, so it has no sense to secure it with any collateral. Payday loans make part of personal loans, meaning that the money is borrowed for personal use, no matter what that is. Also payday loans have a small interest rate, mainly because the sum is small.

The best loan would be one that has no interest, but even loaners have to live from something, so they charge small percentages to have some income on payday loans.

It’s not hard to find payday loan offers. Probably this is the most common loan and you can find such a loan in any bank or credit company. You just have to take a good look. There are many companies that try to attract people to them by offering low interest rate, high sums of money and many other benefits. There are even companies that offer the first loan free, meaning that you have to repay the same amount that you have borrowed.

To find a good offer, you simply have to search for it. You can do this by traveling the city and going from bank to bank, or you can use online help. There are a lot of web sites that help you compare the offers and decide which one fits your needs the best. A payday loan is a small sum, so if you don’t want to waste your time with searching the best offer, simply pick the first offer that appears on the search list. It will probably be the best offer or at least it will be good. You apply for it, get it and problem resolved.