Noob: insurance & rent vs buy

 
Old Feb 27, 14, 4:03 pm
  #1  
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Join Date: Mar 2009
Location: East Coast
Posts: 1,018
Noob: insurance & rent vs buy

My car didn`t start today, and it is the time to consider other options (I`ve procrastinated for a long time, and today was the day I had to let it go).

While buying a new one is somewhat an option, I haven`t been driven a lot lately-maybe twice a week. I do need a transportation since I live in FL.

Investing into a nice vehicle to sit on a driveway is a bad idea; buy just an average one is not exciting and not cheap either. I am considering renting by a day, cancel my insurance, and get rid off the broken vehicle. I pay $60/month for insurance (PIP & Bodily Injury Liability), $100 to AAA, maintenance, etc.

The more I think about getting rid off those expenses, the more I am getting convinced to rent. Plus, I can earn miles and points! Since I`ve never rented a vehicle, what am I missing here? I mean what should I be aware of? Does my plan sounds like a plan?

If I cancel insurance, will I be ok with just a credit card coverage (I got tons of cards, but haven`t checked which one offers what)? Or, would I have to pay for insurance no matter what?

Also, which partner offers the most miles/points?

Thanks a lot!
Kat007 is offline  
Old Mar 6, 14, 11:36 pm
  #2  
 
Join Date: Jun 2013
Location: Lake Arrowhead, GA (north of ATL)
Posts: 19
You should consider the following-

A rental vehicle must have liability insurance coverage by law. You can purchase this coverage for each rental, but a 'Non-Owned or Non-Owner Auto Policy' would be more cost effective for someone renting as frequently as you would be. A Non-Owned policy provides Bodily Injury and Property Damage Liability for any vehicle you rent. You will pay about the same as you currently do $360/year for this type of policy.

Even with the above policy, damage to the rental car would NOT be covered. The rental agencies sell a Collision Damage Waiver (aka- Loss Damage Waiver) which protects you from any damage or loss to the vehicle. It often costs an extra $15-20 or more per day to add this and you'd be on the hook for the entire value of the vehicle without it!

Many credit cards include some degree of rental care coverage, but it varies from state to state and from one bank to another. In my experience, working in the insurance industry, depending solely on a credit card's coverage to protect you can be a dangerous gamble.

Have you considered leasing an inexpensive new vehicle instead?

Currently, you can lease a 2014 Honda Civic LX 4-door for $0 due at lease signing and $210/month for 35 months with 12,000 miles per year allowed. A 2014 Accord LX 4-door with the same terms is $250/month.

You could also go upscale with a 2014 Acura ILX 4-door for $0 due at signing and $270/month for 35 months. That is a $28k entry-level luxury car with heated leather seats, moonroof, premium audio, automatic climate control and power everything!

FYI, lease deals that require little or $0 down are highly preferable because a down payment usually isn't recoverable if the vehicle is totaled during the lease period. Also, for a good lease deal, you should choose a vehicle that has a high residual value (what it will be worth at the end of the lease). You pay for the difference between the price of the car and what it is expected to be worth at the end of the lease period. Honda and Mazda currently have the highest residuals among non-luxury brand vehicles. Mazda has some great cars and good lease deals, but they require around $2k at lease signing. Only Honda and Acura are currently offering $0 down lease deals.

You'd still be required to carry full coverage insurance, but the vehicles would be under full warranty during the entire lease period. The only thing you'd pay for during the 36,000 miles or less that you had them would basically be oil changes and very limited minor maintenance (possibly air filter, in-cabin air filter change 1x). All of the cars I mentioned also get 35-40mpg on the highway, so you'd save on fuel also. =)
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Old Mar 7, 14, 9:10 pm
  #3  
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Join Date: Mar 2009
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IgoZoom, thanks so much! That info is really, really helpful.

I am now looking at Honda. I get $420/month to lease Civic (not a base one, but for one with about $23K configuration. Why do I get that number?

I definitely like $200-$280 price range. And I definitely need everything power and leather seats.

Accura is not presented in my area, and the closest one is within 70 miles.
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