Auto Insurance Explained in Simple Terms

Auto insurance, is insurance that you purchase for your cars, trucks, motorcycles and boats etc. It provides you with protection from losses that may incur as a result of a car accident. While this may sound simple enough to understand there are many types of auto insurance policies available to you and it can be rather confusing. Your coverage level and types will vary depending on the policy that you choose.

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How Do I Know If I Should Buy Or Lease A Car

There are many important differences to consider when you are deciding whether to get a loan to purchase a car or lease a car from a dealership. Some of the considerations are whether it is business or personal, how many miles you will drive and how long you intend to keep the vehicle. With a conventional loan the car belongs to the bank that gave you the loan until you have paid off the loan. Then, the car becomes yours.

If you are the type that keeps a car forever this is probably for you. With a lease you are essentially renting the car from the dealership. The lease is like a rental agreement. You make monthly payments to the dealership. But the car does not belong to you.

When the lease ends, you have to return the car to the dealership. Now let's look at some other considerations and comparisons between a lease and a regular loan. Wear and tear: No additional costs for wear and tear in your loan agreement.

Most leases charge you extra money for any damage they find at the end of the lease that goes beyond "normal wear and tear." Monthly payments: Payments are higher with a loan; however, at the end of the loan, you own the car. Payments are lower with a lease.

This is because you are not purchasing the car; the dealership still owns it. Once your lease ends, you turn the car back in and the dealership can sell it or lease it to another customer. You may decide to purchase the car at the end of the lease; however, the total cost ends up being more than it would have been if you bought the car instead of leasing it. Mileage: No mileage restrictions with a loan. Leases restrict the number of miles you can drive the car each year.

If you exceed the mileage allowed, you have to pay the dealer for each mile over the limit, in accordance with your lease. For example, a dealer may charge you 15 cents for every mile that you drive over 24,000 miles in 2 years. If you drive the car an additional 3,000 miles, you would owe the dealer $450 for those miles. Auto insurance rates: May cost more during the loan than it will after the loan is paid, because the lender may require more coverage, but usually still less expensive than auto insurance for leased cars. Usually costs more if you lease a car than it does if you buy. Most car leases require you to carry higher levels of coverage than purchase agreements do.

Some insurance carriers may also calculate leasing to be higher risk than purchasing.

Gregg Hall is a consultant for online and offline businesses and lives in Navarre Florida. Get your car parts at

Auto Insurance

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