Insurance Won’t Cover the Damage Costs to Your Car?

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A car is something that is an essential for many of us, yet at the same time is something that demands a lot of our time as well as a significant portion of our monthly budget. One proportion of the payments we make related to our car each month is our insurance. Car insurance is mandatory across Australia, with the punishment for not having insurance varying across states. Whether we like it or not, we’re factoring in car insurance when we think about vehicle costs.

Your Car Insurance When You Have an Accident

We pay our insurance premiums when we need to, and as such when we have an accident or otherwise damage our car, we expect to be covered adequately in order to meet the costs of the necessary repairs. Yet, by the time any insurance excess costs have been covered, we can often find that:

  • We can’t afford to pay for the repairs that are needed beyond the insurance cover.
  • If the car is a write off, we do not have enough cash left over to cover the cost of a new car.

What we must also consider is that if we make an insurance claim, our future insurance costs may then go up as a result. Depending on the status of our current personal budget this can then influence the affordability of our insurance as well as have a knock-on effect on other areas of our finances. As we’ve already explored, car insurance is mandatory, so it appears we have little choice but to adapt to the situation as best we can.

Dealing with Your Car Getting Old

Given the way modern cars are built, if you buy a vehicle from new and conduct regular checks, servicing, and drive in a non-aggressive manner, then your car can easily last 15 – 20 years even if driven a lot of miles.

However, a new car can often seem financially out of reach for many of us, which means we go out and buy a second hand car. What happens when we buy a second hand car? As expected, the car dealer will do a great job of assuring us that the car is in great condition and has been looked after, hasn’t been issued with a defect notice, and is going to last you for many years to come.

What we may not know is what small problems the car has that have not yet been diagnosed or disclosed, or what repairs have been carried out on the car in the past. Depending on where we buy our second hand car, there may even be short term fixes that have been applied in order to mask a bigger problem.

Whether you bought your car second hand or from new, it is highly unlikely that any insurer will cover you for wear and tear on the vehicle. It is expected that cars will get old and as such there will be problems that come with this ageing.

Still, you may find yourself in a position where you’re constantly paying for small repairs when in the long-run it would be cheaper to buy a new car. Yet, you have the money for a $500 repair every few months but not $25,000 to buy a new car, so you carry on regardless. It is easy for old and rundown cars to become a “money pit” in this way, and what ultimately happens is that we end up paying out a few thousand dollars over a period of time before the car becomes irreparable. Unfortunately, when we’re left with a car to be scrapped you might be lucky to get $200 from someone who wants to buy it to use for spare parts. The money we’ve spent on repairs counts for nothing towards the value of the vehicle at this point, and your insurer isn’t going to help out, either.

Thankfully, there’s a solution that can stop your car becoming a “money pit” and also enable you to get a new vehicle.

Taking Out a Car Loan to Fund a New Vehicle Purchase

All of the frustrations we’ve discussed so far don’t ever need to happen. Instead of having to pay out to have your car repaired because your insurance doesn’t cover all of the damage done, or spending thousands of dollars keeping an old car running just because it’s more affordable than buying a new car, a personal loan may help you out.

By taking out a personal loan with NOW FINANCE, you can get the cash to pay for a new car today, and repay the loan over a period of up to seven years. This means you won’t need to:

With a NOW FINANCE personal loan, you can borrow up to $40,000 to pay for your new car, and soon be travelling around town and to work in style. Look out of the window and see a car on your drive that makes you feel good, not one that leaves you waiting for something else to go wrong.

Get your interest rate before applying for a NOW FINANCE personal loan here.

Disclaimer:  This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs.  Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.

Approved customers only. Terms, conditions, fees and charges apply. All applications are subject to NOW FINANCE’s lending and approval criteria. Settlement times may vary depending on circumstances. Loan repayment terms range from 18 months to 7 years. Interest rates range from 6.95% p.a. (8.57% p.a. comparison rate) to 17.95% p.a. (19.53% p.a. comparison rate).

*Comparison rates are based on a loan of $30,000 over 5 years.

^No fees apply only to approved loan amounts between $5,000 to $15,000. Other fees including late payment fees and dishonour fees may apply.

WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

EXAMPLE: An unsecured personal loan of $30,000 borrowed for 5 years with the interest rate of 6.95% p.a. (8.57% p.a. comparison rate), would estimate to a minimum total amount payable of $36,883.60 via the weekly payment option (including a $495 establishment fee and $13 per month administration fee). Rates are subject to change.