Guest author David Bakke shares his insights on money management, smart shopping, and getting out of debt on Money Crashers, one of the top ranked personal finance blogs.

In this day and age, people are constantly upgrading just about every appliance, device, and gadget they own. Therefore, it’s not surprising that many people feel the need to buy a new car every few years. Personally, I think the obsession with “upgrading” is silly, but I also understand that it’s just one of society’s latest trends.

Unfortunately, this trend can often cost you more than just the retail price—buying a new car rather than keeping your old one carries quite a bit of added expense. Here are five great reasons why you should hold onto that “outdated” vehicle a while longer.

5 REASONS TO KEEP YOUR OLD CAR

1. Life Without a Car Payment
It took me a long time before I got to experience the joy of life without a car payment. Unfortunately, I wrecked my first two cars right before they would have been paid off. Then, in 2000, I finally paid off a car that I was still driving.

Let me tell you something: not having to write a check for a car payment every month amounts to huge savings in your personal funds. Just imagine having an extra $300 or more left over at the end of every month. I was able to use the funds to pay off all my credit card debt and begin seriously saving for retirement.

If you are currently driving a car that is paid off but are contemplating purchasing a new one, ask yourself this: “Do I really want that chunk of money coming out of my pocket on a monthly basis again?”

2. Opportunity to Save for Your Next Car
If you’ve just paid off your current car, why not use the opportunity to save for a new one? Continue to “make” your car payment, but set it aside in some sort of interest bearing account.

If you hold onto your current car for three more years, putting that $300 or so payment away each month, you would have almost $11,000 to put towards your next car. And that doesn’t even include the interest you’d gain on that money!

3. Depreciation
I’m sure you’ve heard it a million times before, but it’s important to remember when you’re tempted to purchase that shiny new vehicle: a new car begins to depreciate in value as soon as you drive it off the lot.

It’s impossible to give you any hard numbers on the matter since it fluctuates based on the purchase price of the car. Here’s a rough estimate to keep in mind: you can expect to lose somewhere in the area of at least 50% in value during the first five years of owning a new car. Compare that to the cost of maintaining your current car over the next five years. I bet Old Reliable’s looking pretty good right about now.

4. Indirect Costs
Oftentimes, people do not take the indirect costs of owning a car into account when considering whether to buy a new vehicle.

Take auto insurance, for example. If you purchase a new car, plan on paying significantly higher insurance premiums. To illustrate, I obtained quotes for insurance on a 2010 Toyota Corolla and a 2005 Toyota Corolla utilizing identical factors (including age and driving record). If you purchased the newer car, you would be paying almost $300 more annually for your auto insurance coverage.

There are also tag renewal fees to consider. I currently own two cars: a 1994 Toyota and a 2005 Toyota. The annual tag renewal fee for my 2005 car usually runs about $150. The renewal fee for my “clunker,” however, is less than $30. Combine these two expenses alone and you’ll save over $400 per year by keeping your current auto.

5. The Environment
Did you know that keeping your current car helps the environment?

The act of replacing your vehicle has direct effects on the world we live in. The process of building a new car expends both energy and resources, and there are also environmental costs to disposing of an old car. It takes energy to shred and recycle metals, and some car parts that cannot be recycled end up in a landfill. The leftover fluids, refrigerants, and other chemicals simply turn into hazardous waste.

FINAL THOUGHTS

I drive a 1994 Toyota Tercel. Yes, 1994. It is not the most attractive car in the world, but it gets me from point A to point B just fine. For several years, my reasoning has been that I will continue to invest money in the maintenance of this car until a repair comes along that costs more than the car’s current value. That hasn’t happened yet.

If you’re worried about the repair costs involved in maintaining your current car, ask your friends and family members if they know someone who does repairs on the side. Alternatively, if you’re handy, learn DIY car maintenance tips. You’ll save a bundle over taking it into the shop. If you think that you “need” a new car right now, look at the overall financial cost. You may just want to hold onto your current car for a while.

Did you choose to keep an older car rather than purchase a new one? How did you use the extra money?

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It’s a conundrum as old as cars themselves:

• Buy new and enjoy the security of new-car reliability and a factory warranty? Or
• Buy used and save thousands on depreciation?

Now, if I were to poll personal finance bloggers, I’d guess 98% would say always, always, always buy used. Because the numbers don’t lie. Statistically, buying a used car is cheaper. In most cases, the increased cost of maintenance on a used car never exceeds the premium you pay for a new car.

Case in point: According to Edmunds, a new Honda Accord depreciates by 27% in its first year. And Hondas are known for holding their value. A Chevy Malibu depreciates 41% in its first year. That means if you paid $25,000 for a Malibu, just a year later, you could only sell it for $14,756. In five years, a Honda Accord depreciates 55% and a Malibu 68%. So, aside from the marginal increased maintenance cost, if you buy a brand new Chevy Malibu instead of one that’s just a year old, you’re paying $10,250 for that new car smell.

But wait, aren’t I supposed to be making a case for buying a new car?

Yes. Because you get what you pay for.

When you buy a used car, you’re taking on risk. You can check the vehicle history report, inspect the previous owner’s maintenance records, or take the car to your mechanic for an independent opinion. Still, there could be untold repair bills waiting for you around the corner. Actor Rip Torn once said: “I’ve got two old Volvos, two old Subarus, and an old Ford Ranger. If you’ve got an old car, you’ve gotta have at least several old cars, ’cause one’s always gonna be in the garage.”

That’s good advice, because used cars break. Sometimes, right away. Many years ago, I purchased a used car from a friend. I was living in Massachusetts at the time, which requires cars pass an emissions test within seven days of purchase. The car failed and took $900 worth of repairs to pass. Fortunately, I was able to work out an agreement with the seller over a few stiff Vodka Tonics, but I wouldn’t have been so lucky if he weren’t a friend.

Other people I know have purchased cars that ultimately end up being total lemons and require several thousands in repairs annually. Worse, they’re unreliable. The wrong used ride can strand you on a frigid highway en route to a Phish show with a backpack full of pot and an unconscious drifter in the back. After paying the tow, the repair, bail, and your lawyer, a reliable new car will seem like a deal. New cars break, too, but the odds (and the warranties) are better.

Let’s talk numbers.

In most cases, used cars need work: some brake work here, a new muffler there, maybe some new tires. So you spend $500 or $1,000, but you saved several thousand because you didn’t buy new. Unless, of course, you buy a used Saab or any other lemon, in which case you could spend $5,000 in just a couple of years trying to keep the thing on the road.

Advantage new car? Maybe, maybe not. But he longer you keep a car, the more a new car’s premium price gets absorbed into lifelong ownership costs. If you’re paying $1,500 a year in repairs from year one instead of year four, that’s $6,000 saved on maintenance with a new car. Is that enough? Maybe, maybe not.

But here’s why you buy a new car: For the security. The insurance. The risk abatement. Basically, you a buy a new car because you don’t want it to break down. And that’s something you can’t put a price on. That’s value.

Back in my financially ignorant days, I purchased—new—a pretty basic Toyota Tacoma, which I’m still driving today. Although now I see that purchasing any vehicle at the time was a terrible financial decision, I’m not sure that I regret buying new. Could I have gotten a good car for less? Yes. But after years of driving cars that would leave me stranded once every couple of months, it’s nice to have gone five years in a car that hasn’t stranded me a single time. That’s a premium that’s worth paying, but only if you can afford it (which of course, I couldn’t when I bought).

The next time I buy a car, I’ll be able to afford that premium if I choose. Maybe I will, maybe I won’t…but I’ll have a good reason either way.

If you’re shopping for new cars, do it right and get dealer quotes online first…don’t pay more than you have to!

p.s., there are other benefits to buying new:

• Low interest rates. Got good credit? You can get a car loan for between 0% and 4% with little or nothing down. I don’t advocate financing a car you can’t afford, but at these interest rates, finance a car and invest the cash. See my tips on financing a car the smart way.
• Time savings. Maintenance aside, you will save time buying new. Buying a new car is easier because you don’t need to locate specific cars and research their histories. Walk into a dealership, negotiate, and drive home. And time is money.
• Efficiency and safety. In general, every year cars are built more efficient and with more safety features.

For many of us in the United States, owning a car is a necessity. We need a car to get to work. And we need to work so we can make mortgage payments, save for retirement, and pay for all those other expenses in between.

But those wheels come at a cost. And the real cost of owning a car is a lot higher than you think.

According to the U.S. Bureau of Labor Statistics, transportation costs were the second largest household expense in America in 2008 after housing. Those costs comprised 17% of annual household income. In comparison, we spent 5.9% of our annual income on healthcare and 12.8% on food.

That’s right: we spend more money on cars than we do on food.

How do transportation costs add up so quickly? To find out, consider all of the following costs associated with owning a car:

• Initial purchase price. The cost of vehicle (cash paid or the total of lease or purchase payments, including finance charges) divided by the number of years you own the car.
• Sales tax. Divided by the number of years you own the car.
• Gas
• Insurance
• Maintenance and repairs
• Registration and annual excise taxes
• Parking and tolls

Vehicle Cost

Of course, cars aren’t cheap. The initial price of your car is a significant expense, even if you spread it over many years. And if you finance your car, you’re also paying interest that often adds up to thousands of dollars over the life of the loan. If you own your car, you can sell or donate it someday, putting some cash back in your pocket. If you lease, your payments are gone—just the cost of driving that car for that month.

Too often, however, car buyers making their decision based upon looking at a monthly payment and saying “I can afford that.” Unfortunately, those buyers aren’t taking into account taxes, gas, parking, insurance, and maintenance. In an ideal world, we could see the true annual cost of owning a particular car. We might make very different decisions.

As an example, if you purchased a car, with cash, for $15,000 and kept it for six years, it would cost $2,500 a year. If you could sell it at the end for $4,000, you reduce the cost to $1,833 a year.

Insurance and Taxes

Unless you’re lucky enough to live in state without sales tax, tack another five percent or more to the purchase price of your car. That’s $750 on our $15,000 car, or $125 a year. And then there are registration fees and annual excise taxes—often several hundred dollars a year on newer vehicles. For our example, let’s say $50 for registration and $200 a year in excise taxes.

Finally, there’s insurance. Most states require some form of insurance and every sane and responsible driver should have good coverage. According to CarInsurance.com, the 2010 average annual auto insurance premium is $1,533. If you’re a good driver, hopefully yours is lower. Still, that’s a big chunk of change.

Gas and Maintenance

If you keep track of your car’s fuel economy, it’s fairly easy to figure out how much gas will cost you. Here’s a down and dirty example: If you drive 12,000 miles a year, get an average of 30 mpg, and pay an average of $2.75 per gallon, your annual fuel cost is $1,100.

Maintenance is trickier. You can count on spending $100 or so a year on oil changes, but what about other routine maintenance and unplanned repairs?

According to Edmunds.com, the lowest-maintenance new cars—like the Toyota Yaris—cost just under $2,500 to maintain over the first five years of ownership. Of course, the costs just go up from there (depending on the vehicle and, of course, with time).

For the average vehicle that’s a few years old, let’s use $800 as an average for annual maintenance costs. You can, of course, save money on this figure by being good about preventative maintenance and finding a reliable independent mechanic who costs less than the dealers.

The (Shocking) Total

All things considered, our $15,000 car that we keep for six years and later sell for $4,000 costs us $5,641 a year. And that doesn’t include parking, tolls, inspections, or car washes. And at $15k, this is a modest car. Most of today’s large trucks, SUVs, and “entry-level” luxury cars sell for well over $30k.

More than we like to admit, cars are money sucks. When you buy a car, you are going to lose money no matter how you spin it. To reduce the real cost of owning your car, buy used, get the best price you can, pay cash, and take care of your car and keep good maintenance records (including oil changes, tire rotations, etc.) so you can resell it for as much as you can.

Of course, if you can forgo a car altogether and just take the bus or bike to work, you’ll save a lot more of that $5,641, so more power to you!

Which makes me wonder: What are your best car buying tricks? From my brief stint as a car salesman, here’s what I know:

Always do your homework. The internet’s full of car pricing information, so take advantage. At the very least, get competing price quotes online from a site like Edmunds. If you’re buying used, you may also want to spend a few dollars for a used vehicle report like those from AutoCheck®.

Negotiate your price via phone or e-mail. Do your test driving first. Leave the dealership. Call back the next day and negotiate a price over the phone. The dealer will hate you, but you’ll get the best price possible.

Consider buying used. Vehicles are not an investment. It’s an emotional thrill to buy a new car, but a used car is a far better value.

Finance wisely. If you have to borrow money for a new car, get a car loan the smart way. Put money down, and shop for rates! Check auto loan rates with your local bank or credit union before applying for credit at the dealership.

Avoid Trading In. Cream-puff or clunker; you can get more for your old car on the private market. Don’t be lazy, sell it yourself.

Skip the extras. In general, dealer extras like paint coating to warranties are not worth it. Save the cash for car washes and oil changes.

What about you? Have you successfully saved money buying a new or used vehicle? What are your best car buying tricks? Let me know!

Why Choose Peer-to-Peer Auto Loans?

Loan is Unsecured. Hopefully you’ll never run behind on any of your loan payments. But if you fall behind on an auto loan, the lender can repossess your vehicle—you know, send two scary looking armed repo guys to your house at 4 a.m. to tow your car. Peer-to-peer loans are unsecured, meaning they can’t take your car if you pay late. (Paying late will still hurt your credit, of course, you just won’t risk losing your wheels).

Pre-payment Advantage. Some car loans may not allow prepayments, or will penalize you for paying down the loan early which, of course, you should do if you can afford it. With a peer-to-peer auto loan, any additional you pay each month is automatically applied to the principal, making it easy for your to pay down your loan as early as you are able—saving you a load on interest.

Ability to Shop Like a Cash Customer. Perhaps the biggest advantage of using a Lending Club loan to buy your next car is that you can walk into the dealership as a cash customer. This gives you considerably more room when negotiating for your car because the salesperson can’t use one of the auto industry’s favorite tricks–quoting prices as monthly payments instead of total price. You’ll be able to draw a hard and fast line with the dealer as to what you’ll pay.

Sidestepping Big Banks. Peer-to-peer auto loans are just what they sound like: Average people loaning other average people money. You can feel good that the interest you’re paying is going straight to ordinary investors, not lining the pockets of national bank execs. This may or may not matter to you, but personally I like it.

Peer-to-Peer Auto Loans from Lending Club

Lending Club is a leading peer-to-peer lending site that provides 3- and 5-year loans of up to $25,000. To start a loan application, you’ll need a credit score of at least 660 (check your credit score for free now).

Next, you’ll need to apply for the loan amount you want on Lending Club and wait for the loan to be funded. If it is, you’ll get the loan distribution directly into your bank account. Then, you can shop for your next car with “cash”.

Apply for a Lending Club Loan Now

Want to get the best rate on an auto loan? Money Aisle may help you find the best auto loan rates before you even step foot into a dealership, giving you a big upper hand because you can negotiate like a cash buyer.

How It Works

On MoneyAisle’s home page, simply enter the following information:

• Loan Type – Auto refinance, new car loan, or used car loan.
• Your Zip Code
• The Car – The year, make, and model.
• Loan Details – An estimate of the loan amount and purchase price.
• Your Credit Status – Your credit score or estimated credit score range. (Don’t know? Get your credit score now »)

Click submit, and Money Aisle comes back with competing auto loan rates in about 30 seconds. On the results screen, shown above, you can compare rates and monthly payments from different lenders and for different loan terms (24, 36, 48, 60, or 72 months).

If you see a loan you like, you can click through and begin applying for the loan online.

I ran a quick search for an $18,000 auto loan for a 2010 Ford Fusion costing $22,000 with “Very Good” credit. Several lenders came back, including some credit unions, with rates as low as 3.70% on a 36-month loan. According to BankRate.com, the same-day average 36-month new loan is 6.45%. Using these interest rates, the Money Aisle loan would save the buyer $800.63 in interest over three years.

The Good News

Most people who finance a new car get fleeced. That’s because:

• They finance through a dealer and they’re so excited about their new car, when the F&I manager quotes a rate, they don’t challenge it.
• Or, they’re so afraid they won’t get approved with spotty credit, they fall victim to other online “bad credit OK” auto loan lenders that charge outrageous interest rates of 12-25%.

Money Aisle auto loans have the ability to change all that because they provide loan shoppers with competing rates from honest lenders like local banks and credit unions. (They can even help borrowers stuck in a bad auto loan with an auto refinance). If you’ve decided to finance a car the smart way, you might want to make Money Aisle part of your plan.

Get an Auto Loan Quote from Money Aisle Now

What I know now is that it’s always best to buy a car with cash. Still, less than 15 percent of American car buyers purchase their vehicles outright with cash. The other 85 percent take out auto loans. So if you’re going to finance a car, at least do it right.

1. Arrange Financing Before You Shop

If you’re going to finance a car, the biggest piece of advice I can offer is to visit your bank or a local credit union and apply for an auto loan before you start car shopping. Most of the time local banks and credit unions can offer borrowers with good credit the most competitive interest rates on both new and used car loans. Even better, you may be able to use the pre-arranged financing as a bargaining chip with the dealership’s finance and insurance (F&I) manager and score an even lower interest rate. Finally, wherever you apply for financing, know your own credit score before you apply. Lenders use your score to determine your interest rate, and they may try to inflate the rates you qualify for if they suspect that you don’t know where your credit actually stands.

2. Put Twenty Percent Down

Unlike real estate, cars are depreciating assets. In other words, your car is worth less and less every day. So when you finance a car, you run a big risk of becoming “upside down”, a situation where you owe more on your car loan that your car loan is worth. That means if you ever need to, you may not be able to simply sell your car and get out of the car loan. Being smart about your financing is all about avoiding this situation. One simple thing to do is to put money down…ideally twenty percent. The more money you put down, the closer the value of your car will be to how much you owe on the loan. This may seem like a no-brainer, but many dealerships don’t even require buyers with good credit to make any down payment at all!

3. Buy Used

Brand new cars depreciate the minute you drive off the lot. In fact, they depreciate so much in the first year of ownership that a twenty percent down payment may not be enough to prevent you from becoming upside down on your car loan. But buying a used vehicle—even one that’s only a year old—can help prevent this because the biggest chunk of depreciation has already happened.

4. Pay For Taxes, Fees and “Extras” With Cash

When you buy a car, there are always miscellaneous expenses like sales tax, registration fees, documentation fees and any extras you choose to purchase like extended warranties. Often, dealers are more than happy to roll some or all of these fees into your financing. Unfortunately, doing that just ensures you’ll be upside down on your car loan, at least for a while, since you’re increasing the amount of your loan but not the value of the car securing the loan.

5. Finance for 36 Months or Less

Ten years ago, most car loans came with two- or three-year terms. As expensive trucks and SUVs grew popular, however, dealers began offering longer and longer car loan terms to make these pricey rides “affordable” to more people. Today, five- and even six-year car loans are common. Unfortunately, if you finance a car for longer than three years (36 months), you can be fairly certain you will be upside-down on your loan, at least for a while.

Car dealers want to make you think that you can afford just about any vehicle they sell. If you’re smart, you will approach buying your next car knowing that is simply not true. Realistically, you can afford any car that you pay for with cash. But if you must finance your next car, at least follow these rules to make sure that your new wheels won’t someday leave you financially stranded.

Are You Eligible for Cash for Clunkers?

Just because you drive a beater doesn’t mean that your car will qualify for this program. To qualify:

• Your trade-in car must be no more than 25 years old
• Most trade-in cars must get 18 MPG or less (with some exceptions)
• Your trade-in car must have been registered and insured for a full year preceding the trade
• You must agree to scrap your old car (i.e., you cannot sell it for its full value and collect the rebate

In addition to these requirements, to qualify for the cash for clunkers rebate, you must

• Purchase a new vehicle (not used) from a participating dealer
• Purchase a vehicle that meets fuel economy requirements

How to Get a Cash for Clunkers Rebate

To participate in the Cash for Clunkers program, simply take your qualifying trade-in auto to a dealer. Once you select your new car, the dealer will apply the applicable credit at the time of purchase. You do not need to register for a voucher; the rebate is given at the dealership. When you visit the dealership, be sure to ask about the scrap value of your vehicle. Although it won’t be much, dealers are required to pay you the scrap value of your car in addition to the rebate.

Should You Buy a New Car With a Cash for Clunkers Rebate?

That all depends. Getting up to $4,500 in trade value for a car that is otherwise worthless is a great deal, but only if you can afford to buy a new car. Even the most basic new cars cost about $10,000 plus taxes and registration fees, so you’ll be looking at fronting more than $5,000 in cash. Ask yourself: How long will your current vehicle last you? If you’re pretty sure you’ll need to pony up for a new ride in a year or two anyway, it might be wise to check out cash for clunkers. Will you make it more than a couple years? It might be best to keep on clunking.

You can learn more about the CAR Allowance Rebate System (CARS) at CARS.gov.

The cash-for-clunkers bill would give a $4,500 credit to anybody who trades in an old car for a new(er) vehicle that gets at least ten miles per gallon more, or a $3,500 credit for new cars that get between four and up to 10 MPG better fuel economy. According to the current version of the bill, to qualify, the trade-in vehicle must be model year 1985 or newer, be drivable, and must be destroyed upon trade-in (it cannot be resold). Additionally, the new car purchased must get at least 22 MPG or, if it is a light-duty truck, at least 18 MPG.

Obviously, the cash-for-clunkers bill is intended to eliminate less fuel efficient cars and create an incentive to buy a car (and presumably give a boost to the flagging auto industry). Critics of the bill say that we’re over-incentive people to spend money in certain struggling industries (this program would be akin to the $8,000 first-time home buyer tax credit designed to stimulate the housing market).

Personally, I think the cash-for-clunkers bill is a great idea. (And not just because I want to see my dad get some new wheels!) Even if the economy (and auto industry, in particular) weren’t in such dire straights, I believe it’s partially our government’s responsibility to begin to find ways to reduce our dependence on oil. Although moving towards more fuel-efficient vehicles isn’t a big a step as, say, developing alternatives to fossil fuels; it’s a start. Plus, this bill pushes for greater fuel efficiency in a model that is true to our free-market economy: Drive a more fuel-efficient car, get a financial incentive. Makes sense to me.

What do you think about the cash-for-clunkers bill? A good idea or too much government involvement? Would you take advantage of the incentive? Let us know!

Auto Insurance Coverage Type #1: Bodily Injury Liability

As mentioned in my earlier article, bodily injury liability coverage is required by law in every single state. It protects your assets in the event you cause an accident and injure or kill another person.

Although this type of insurance coverage is required by law everywhere, the legal minimum coverage may not be enough if you serious hurt or kill somebody else in an accident. For example, some states only require your bodily injury liability insurance to cover you for $10,000 in damages per person and $20,000 per accident. Even minor medical expenses that another injured driver may sue you for could easily exceed this small limit.

If you own your home, have money in the bank or investments, own a business, or have any other assets, you want to get enough bodily injury liability insurance to protect them so an injured drive can’t sue you and take your assets.

Auto Insurance Coverage Type #2: Property Damage Liability

This is the insurance coverage that covers you if you cause an accident and damage another vehicle or physical property. If you hit somebody and they need body work, their insurance company will recover the damages from your insurance coverage (if you caused the accident).

Many states require drivers carry this coverage, but the minimum limits may not be enough. Some states require just $5,000 in property damage liability coverage. If you only carry $5,000 of this coverage and cause an accident that totals another driver’s $70,000 Mercedes, however, you could be on the hook for $65,000!

Auto Insurance Coverage Type #3: Medical Payments

This insurance covers the cost of any medical treatments required by you or passengers in your vehicle if you cause an accident. It does not cover other financial damages that result from an accident that you cause, such as lost wages.

Auto Insurance Coverage Type #4: Uninsured and Underinsured Driver Coverage

This coverage protects you when you are hit by a driver without insurance or without sufficient insurance. In most states, uninsured/underinsured driver coverage only covers bodily injury losses, but in a few states it will cover property damage losses as well.

Auto Insurance Coverage Type #5: Physical Damage Coverage

Physical damage auto insurance is divided into two categories: Collision and comprehensive insurance. Collision insurance covers any damage to your vehicle only when you are involved in an accident (including, for example, if you back into a tree). Comprehensive insurance, on the other hand, covers all kinds of damage to your vehicle (including weather damage, windshield damage, theft, fire, or vandalism).

Physical damage coverage is optional unless you lease or finance your vehicle, in which case your auto lender (lien holder) will require you carry this coverage to protect their asset until it is paid off. Carrying comprehensive coverage is smart during the first few years of a vehicle’s life when it is still a valuable asset (holds substantial resale value).

If your car is older, however, consider canceling comprehensive coverage. The less valuable your car on the resale market, the less you can expect to recover from insurance should the car be damaged in an accident. If you drive a really old car, for example, and it sustains even minor damage in an accident, the insurance company may decide the cost of repairing the car is higher than its resale value and decide to give you it’s resale value (maybe $1,500) instead. If your carry a $500 deductible (the amount you agree to pay out-of-pocket in any insurance claim), comprehensive coverage would only pay you $1,000.

Curious how your insurance coverage stacks up to the minimum coverage requirements in your state? Need to get an auto insurance quote to compare annual premium costs? Check out our resource comparing auto insurance minimum coverage laws state-by-state, or get a free online insurance quote from Allstate® in about five minutes