Breakdown Insurance for the Daily Commuter

If you are a daily work commuter, you will love breakdown insurance. It is true that your vehicle needs to be less than seven years old and have fewer than 100,000 miles on it to qualify, and that you must purchase your breakdown insurance while it is still under warranty. With all that said, even the best of vehicles can develop unexpected glitches. When minutes count, it is good to have someone you can call.

A Miniature Case History

A woman and her teen-aged daughter stop at a McDonald’s for breakfast. The day before, her vehicle had been in the repair shop to have its brakes repaired. After they obtained their breakfast, mother and daughter walk back to the vehicle, only to discover that the parking brake was on and would not release. The mother’s job was normally 45 minutes away from the McDonald’s, and the daughter’s school thirty minutes away. Even though she called the repair shop, they replied they could do nothing from where they were located even though the mechanical failure turned out to be their fault. The daughter missed her first class at the local junior college and the mother was late for work – again. This particular vehicle had been the cause of several late arrivals. The vehicle was too old for breakdown insurance, but roadside assistance might have saved the day.

Value of Buying New

Let it be said here that no vehicle dealership is backing this statement, but there is something to be said for purchasing a new or even nearly new vehicle. Although you will immediately be slammed with depreciation, it is easier to get a loan for a new car or truck than for one that is used. You will have a warranty for at least the first year of operation, and possibly for the second, and you will be able to begin breakdown insurance that will cover major repairs for the first seven years or 100,000 miles of operation of your vehicle. New doesn’t have to mean fancy. You can get a basic sedan for less than $17,000. You are likely to pay a little more in insurance, so be prepared for a rate hike as compared to the used car you trade in. But the biggest benefit is that if it breaks down, you can call someone to come get it and fix it without being out of pocket for a major repair.

Aging Vehicles

Aging vehicles are not always a bad choice, but you should be prepared for frequent small repairs and the possibility of large repairs. If your vehicle is second hand out of the insurable for breakdowns range and beyond your last extended warranty, it is advisable to develop and keep a revolving savings account of at least $1500 and $3000 is better. At the 200,000 mark, vehicles are more likely to develop major mechanical failures such as locked transmissions, worn piston sockets, and drivetrain issues. As you begin to add up the repairs, that new car payment might begin to look better by comparison especially if you are not an auto mechanic and do not have one in the family. If you are a commuter whose job depends on getting to work on time, having an inexpensive runabout that can be covered by breakdown insurance can be a real job saver.

The Reality of Vehicle Ownership and Work

The fact is that unless you are lucky enough to work from home or live within walking distance of your job, you will need some sort of transportation. For many people that means owning and operating a car, which makes breakdown insurance your best friend.

Road Trips and Breakdown Coverage

Breakdown coverage is far better for road trips than an extended warranty. Breakdown insurance is more flexible when it comes to selecting a repair shop. However, something to keep in mind is the miles you will be traveling and how close you are to the 100,000-mile cut off for coverage. If you are getting close, you might consider roadside assistance instead of or in addition to your breakdown coverage.

Save on Tickets and Enjoy the Scenery

It might seem like a good idea to save money on airplane, bus or train tickets by driving across country, but do it yourself transportation has the same hazards as many DIY projects: when trouble starts, there aren’t any experts to call unless you set up a contingency plan.

Mountains, Vehicles, and Towing

It is fun to watch those shows about big rigs and towing, but it isn’t nearly as much fun to be involved in a situation that requires a tow truck. It is even worse when you are hundreds of miles away from home and there really isn’t anyone to call. That’s where breakdown coverage or roadside assistance or both can be amazingly helpful. First, you have someone to call. Help is only as far away as your cell phone. If you have your regular vehicle insurance through the same company as your breakdown insurance, you only need one number for your vehicle emergencies.

Second, by adding roadside assistance to your breakdown coverage, you can have help for those minor problems such as a flat tire or a loose muffler. Most roadside assistance companies cover 1 hour of roadside help, which is usually plenty of time to change a tire, or to assess a problem that is going to require a tow truck.

Safety for You

It was in 1971 that the Doors recorded “Riders on the Storm,” a song that includes a verse that details the perils of picking up hitchhikers. While you probably know better than to pick up strangers, when your vehicle breaks down, you are vulnerable, especially on lonely stretches of road. The person who stops and asks if you need help is probably one of the good guys but could possibly be one of the not so good guys. When you call your insurance company and a uniformed person with correct credentials and a company vehicle shows up, you know that you are going to receive help. If you have no one else to call, remain in your vehicle and contact the local highway patrol.

Breakdown coverage or roadside assistance are usually inexpensive policies. Whether you are traveling alone or with your family, it is good to know that there is someone to call.

Your Towing is Covered

Sometimes those road trips are a little more expensive than anticipated or you have a little more fun than you had planned. When this happens, you can find yourself short on cash. While there are limits to how far either your breakdown coverage or your roadside assistance contract will allow for towing, you can count on arriving at the nearest repair shop that will work on your type of vehicle. That can be comforting if your funds are a bit more limited than you anticipated.

Just a Little Layer of Comfort

Breakdown insurance or roadside assistance can create a little layer of comfort between you and the harsh reality of being stranded because of something simple like a flat tire or because of a real disaster such as a broken timing gear. Just think of it as a security blanket for commuting or for those long road trips.

The Facts About Home Equity Loans

Most people spend more time in their home than in any other place. This is where many of them unwind from a busy day at work, spend quality time with their family, and entertain guests, family and friends. In today’s tough economic times, people are searching different ways that they can pay down some extra bills, or put some additional cash in their pockets. Many have turned to home equity loans to fill this gap. This article talks about some of the things that you can expect when taking out a home-equity loan.

Yes, it is true. Your home may actually be able to save you from financial distress, or get you out of a devastating event that has happened in your life. This is normally done through a home equity line of credit. The definition of home equity is the overall value of your home above and beyond any money that is owed to pay off your mortgage. This number will increase over time as the value of your home begins to go up. Most people decide to use this value in their home towards an equity line of credit. Some of the reasons that people use home equity loans are listed below.

  1. One of the main reasons that people use home equity loans for is to either repair or remodel their existing home. This is also a great way to build value in your home.
  2. Some parents use home equity loans to send their kids to college. With the rising cost of education, many parents are using home equity loans to fill in any gaps that may exist between the money that they have available with the difference in what they need for their kids to be able to attend school.
  3. Pay off past-due medical bills. The equity in your home is a great way to help you settle an emergency medical bill; pay for a pregnancy, or to help you get through a serious illness.

However, before you jump the gun, and run off to apply for a home equity loan, make sure that you have a good reason for using the equity in your home, because you a definitely want to make sure that you are doing it at the right time, taking into account such things as the interest rate, the amount of time that you want to refinance for, and most importantly, the amount of monthly payment that you can afford.

You must not lose sight of the fact that you are putting your house, sweat, and tears at the stake for money, which could possibly be gone before you know it. Therefore, this is definitely a matter that you want to take plenty of time to research. The 3 tips that are listed below can be used to make the home equity loan process go as smoothly as possible.

  1. Choose your lender carefully and make sure that you are dealing with a reputable company.
  2. Take the time to gather all of your necessary paperwork before hand. You will need such things as tax returns, bank statements, recent pay stubs, and probably a copy of your recent tax bill.
  3. Get as much information up front as you can such as the terms and conditions for the loan.

If you take the time to follow the information and tips in this article, you will ensure that your home equity loan process will go as smooth as possible, and that you will not make a choice that you end up regretting for the rest of your life.

Loan Modification

There are early reports surfacing that over half of loan modifications that were granted earlier this year are in default again, according to bank regulators. So the question that I was trained to ask when speaking with a loan modification prospect: “Can you afford your home – just not the loan that is on it?” should really be restated. That question leaves way too much to speculation as to a homes affordability. A $600,000 loan at 2% interest only (or “I.O.” using industry lingo), would yield a monthly payment of $1,000 – not including property taxes, mello roos, insurance, HOA dues, etc that would also constitute a total mortgage payment. Assuming the home’s value is equal to the loan amount, taxes in California would come to $625/month and insurance about $60/month (not including earthquake insurance, that is.) At this point, you’re looking at a minimum P.I.T.I. (principle, interest, taxes & insurance) payment of $1,685/month. That, however is NOT a basis to determine affordability.

A $600,000 fully amortized loan, at todays rate of roughly 5.5% would create a monthly payment of about $3,407. Your P.I.T.I. would then be $4,092. A few years ago, most people would argue that 5.5% is a terrific rate! Why, then is there is a huge disparity – in this case over $2,400/month – between the standard of affordability borrowers were brainwashed into believing and actual affordability? Lenders’ tried and true underwriting guidelines of no more than 34% – 38% of your gross monthly income going towards your mortgage expense was shattered with the abuse of the “Stated Income”, “EZ Doc”, “Limited Doc” or whatever else the option ARM loan was called. The lines of affordability were not only blurred, they were obliterated!

After about a year of trying to help out their borrowers, lenders are being forced to reconsider their strategy. Let’s face the truth. Yes, the lenders made an obsene amount of money during the Option ARM craze. Yes, the brokers misrepresented the wonderful attributes of the Option ARM loan and conveniently forgot to explain the downside. And, Yes, actual numbers were stretched in the loan application process to ensure approval. These are all truths that burn like “The Scarlet Letter” on the collective chest of the lenders. But the home buyer must also accept responsibility for their part of the process – namely looking away when all this was happening around them. I’ve spoken to many loan modification clients who were so ready to scream “FRAUD!” – to which I had to reply, “but wasn’t that YOUR signature on the loan application (and specifically your initials at the bottom of the income and assets page which proves you reviewed this particular page) that stated you made $6,500 a month as a waiter in a Beverly Hills restaurant?” Boy! those must’ve been some great tips that neither had to be proven to the underwriter nor reported to the IRS.

Now what we are noticing, is that many lenders are requiring a “payment plan” period of usually 4-6 months, to determine that the homeowner is serious about keeping their home – and not just trying to work the system. The plan usually consists of bringing in 20% – 30% of the amount in arrears (if you are more than 7 or 8 months down) or at least one payment if you just entered N.O.D. (Notice of Default) status to show good faith; and a monthly payment to be negotiated – which hopefully would make sense and be lower than the payment that put you into default to begin with. If the plan is adhered to, then and only then will the lender consider paying their legal and administrative fees to permanently modifying the loan. Also good to know, is that many times, what a lender will do for one borrower they will not do for the next. “Prior performance does not guarantee future results” is the phrase I find myself saying to every loan modification client I deal with. One of the reasons for this is that most lenders deal with several investors – and it’s usually the investor that determines the fate of the borrower. So if you are in the market to modify your loan, don’t be surprised if the lender, or their investor, want to see cash up-front to even consider helping you out.