Car loans are just that: loans. The bank, credit union, or consumer lender makes the loan in good faith, and you are expected to pay back the money on the agreed-upon schedule, regardless of the condition of the vehicle. If the vehicle is disabled while you still owe money on it, you may find yourself in a bind. Here are some things you can do to lessen your exposure.
Keep your insurance current.
This is a big help, because if you lose the use of your car due to theft, or if you’re in an accident and have a collision policy, your insurance company will reimburse you to pay off your loan. This will help you qualify for a new loan for another car. You will still have to pay out your deductible, so make sure the cost is an amount you can afford to lose. Many car loans require insurance as a condition of the loan, so check the fine print on your loan agreement.
Michigan auto insurance rates are some of the highest in the country. If your insurance is up for renewal, MSGCU can help. We’ve partnered with TruStage™ and Members Home and Auto® to help you save. We recommend contacting both of our partners to learn more.
Buy GAP coverage.
Unless you come up with a large down payment, chances are you may owe more on the loan than the car is worth at some point during your loan. If you crash your car, your insurance company will generally reimburse you only up to the insured value of the car. Guaranteed Asset Protection (GAP) reduces or eliminates the difference between your vehicle's actual cash value and auto loan balance.
MSGCU offers a GAP insurance option for members. Contact us to learn more.
Don’t skimp on maintenance.
Many breakdowns are preventable, so don’t neglect routine maintenance to help keep it running well. Schedule regular oil changes and filter checks. Ensure you are using the correct transmission fluid, brake fluid, and coolant for your vehicle. If you’re not sure of the best one for your car, call or make an appointment with an auto shop to find out.
Bad tires cause accidents, so don’t forget to check your tires and the spare regularly. Keep them balanced, monitor their wear, and rotate them when you get your oil changed. Make sure you are utilizing the correct tires as you transition from one season to another, like using snow tires in the winter or ensuring your tires aren’t balding in the spring when there’s more rainfall.
While you shouldn’t neglect regular care of your vehicle, MSGCU can help when you need an unexpected repair. Our Mechanical Repair Coverage may help limit your costs and keep you in budget. Learn more.
Consider the warranty.
If a major engine, transmission or drive train issue is a risk you can’t afford to bear, then you might need to consider buying the warranty. Otherwise, you run the risk of owing money on a car you can’t even drive.
Refinance.
If you’re stuck with a high rate and payment on your car, ask about our Auto Rate Pledge. We’ll give you a 0.25% rate discount or our best offer when you bring your auto loan from another lender to MSGCU. It’s quick and easy to apply and no application fee. Let our team show you how much you can save when you switch and refi!
If you need an auto loan or need some guidance along the way, we can help. Call, video bank, make an appointment, or stop by any of our 24 branches to discuss your options.
Category: Finance
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