It’s a common and difficult situation: many working families borrow money to finance a car to get to work but the vehicle stops running before the loan is paid off. If your vehicle is disabled while you still owe on your loan, you may find yourself in a bind.
Here are some things you can do to help mitigate the risk of not having a working vehicle, but still owing on it.
Keep your insurance current.
This is a big help, because if you lose the use of your car due to theft, or – if you carry collision insurance – accident, your insurance company will reimburse you to pay off your loan. This can help you qualify for a new loan for another car. The only thing you are out is your deductible – so make sure that whatever your deductible is, it’s an amount you can afford to pay. Many car loans require insurance as a condition of the loan, so check the fine print on your loan agreement.
Don’t skimp on maintenance.
Many breakdowns are preventable. Here is some great routine maintenance to help keep your vehicle running well:
- Check the oil levels regularly.
- Change your oil and filter as scheduled.
- Use the correct transmission fluid, brake fluid and coolant.
- Keep your tires rotated, balanced and monitor their wear.
- Don’t neglect the spare tire.
Buy GAP coverage.
Unless you were able to offer a large down payment, chances are you will, at some point, owe more on the loan than the car is worth. If your car is in a wreck, your insurance company will reimburse you only up to the insured value of the car. But if you own GAP coverage, the GAP company will, in most cases, pay off the balance that remains on your loan
Consider an extended warranty.
Think about purchasing the warranty on your used car, if one is available. 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. Don’t take risks you can’t afford to lose.
By checking off the items on the list above, you can help avoid an uncomfortable financial situation! Azura is happy to offer both GAP coverage, as well as extended warranty on our auto loans. Learn more now.