Wow, I get a loan and they won’t even take my car? Where do I sign up?

If you’re looking to buy a new car and you’re thinking of financing your purchase with a home equity loan, check out Bankrate’s handy calculator before you make a decision. It let’s you plug in the interest rates and durations of your car loan and your home equity loan, then it tells you which loan will save you the most money.

Since a home equity loan is typically a longer duration loan than a car loan, your monthly payments will be lower, but a car loan usually has a lower interest rate. In general, a home equity loan will be cheaper than a standard car loan if you’re making extra monthly payments and if you write off the interest on your taxes. If you don’t plan on doing either of those things, then a regular car loan will end up being cheaper. Check out the calculator to see for yourself.

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Gap insurance (which isn’t technically insurance, but more of a debt cancellation agreement) protects you if your car is stolen or totaled while the balance of your car loan is less than the value of your car. For example, if you purchase a $20,000 car with no money down, your car might depreciate in value to $15,000 as soon as you drive it off the lot.

So what happens if you’re driving along in your brand new car, having a good old time blaring your new sound system, when you make one wrong turn and *SPLASH*, you find yourself in 15 feet of water with your car rapidly filling up with water. Well, you either can try to break the window if you have a window-breaking tool nearby, or else you’ll have to calmly wait until your car is completely submerged and then you can open the door and swim to safety.

Great, you’re still alive, but your new car is sitting on the bottom of a river, and you still owe a lot of money on it. Your insurance is only going to pay you the $15,000 that your car is worth, so you’re screwed out of the $5,000 gap between the car’s value and what you still owe on it. Well, unless you have gap insurance.

Gap insurance will do just what it sounds like - it will cover the difference between what you owe your lender and what your insurance company pays you if your car is totaled. It’s usually just a one-time charge of a few hundred dollars, and it’s definitely recommended if you buy a car with little or no money down, have an extended-term loan, or if you’re purchasing a car with a very high rate of depreciation.

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I’ve heard the same story a few times during the last couple years - “Hey, if everyone doesn’t buy gasoline on such and such date, then the oil companies will lose billions of dollars and they’ll have to slash prices dramatically! Yeah, power to the people!” or some similar nonsense which always makes me question why I’m even talking to the person in the first place.

Ignoring the obvious impracticality of organizing a nationwide boycott, the only thing this would accomplish would be to delay fuel purchases for a day or so, but it wouldn’t actually affect the supply, and thus the price, of gasoline. The only people who would be affected by such a boycott would be gas station owners, and while some of them might be not be great guys, it would be pretty harsh to take their livelihood away from them for a day.

I’m sure most Binary Dollar readers were smart enough to know all of this in the first place, but if this is news to you, please don’t feel discouraged and powerless. I mean, you still have the power to prevent forest fires. That’s something, right?

Related Article from CNN Money

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The other day I was driving a familiar route (to the pub), and it dawned on me that I never make it through a certain light. If I’m driving the speed limit, I arrive at this light about 4 or 5 seconds after it turns red, so I’m always stuck there waiting for the majority of the red light. Instead of speeding 20 mph over the limit to make this light (and risking a ticket in the process), I decided to slow down and coast for a while (no, there wasn’t anybody behind me). My plan worked to perfection, and I reached the light just as it was turning green. It might not seem like much, but over a period of time, small actions like this can add up to save you a fair amount of money.

I think I read a study once that said stop-and-go driving can increase gas consumption by up to 33%. That means if gas costs $3.00 per gallon, you’re essentially paying $4.00 per gallon, as compared to an efficient driver. If you avoid quick stops and quick accelerations and try to drive at a steady pace, you can save a good deal of money without even trying.

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This picture would’ve been a lot more fun if it hit that fire hydrant instead.

Taking classes on how to drive a car can drive auto insurance costs down. A lot of auto insurance companies are offering discounts for people who invest in extra care safety education.

Not all companies do this. Ask your insurance agent about it. Inform the auto insurance company after you’re done taking the class or else you won’t get your discount. Keep your certification just in case the insurance company asks for proof.

[Photo Credit]

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Bonus points if you can identify the guy behind the word bubble.

Newer cars are more reliable than older cars. Older cars are cheaper to buy. Thomas Stanley’s book “The Millionaire Next Door” says that a car that is 2-3 years old is a good buy to get a reliable car at the cheap purchase price.

Buy a used car that’s 2 years old. Let somebody else eat the steepest part of the depreciation curve. To save even more off the purchase price get a four year old car. This isn’t an exact formula. Different cars yield different depreciations. You need to research each individual purchase. One thing is certain: Buying a brand new car isn’t the best investment.

The Millionaire Next Door [Amazon]

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