Sometimes, your car insurance won’t pay for everything, leaving you on the hook for costly bills you weren’t expecting. Do you know how you’ll handle them? Whether you’re dealing with these expenses now or just want to be prepared in the future, keep reading. Here’s everything you need to know about out-of-pocket damages.
How Can You Afford to Pay Unexpected Out-of-Pocket Expenses?
Let’s cut to the chase — if you’re stuck with out-of-pocket expenses right now, you want to know how to pay for them right now. This is when having an emergency fund comes in handy. These savings can help you cover deductibles or other out-of-pocket expenses.
If your emergency fund falls short of what you need, you may use an online installment loan as a safety net. An installment loan may bridge the gap until your next payday, so you can pay for urgent repairs.
If you visit MoneyKey, you can easily find out more about how online installment loans work. You can use this info to compare your options and find the best available rates for installment loans online.
What Are Out-of-Pocket Expenses?
An out-of-pocket expense is any cost that you have to pay using your own money. It’s literally money coming out of your own pocket, wallet, savings account, or even an installment loan if you’re short on funds.
If you live in a state where car insurance isn’t a legal requirement to drive, any at-fault collision will result in out-of-pocket expenses.
However, out-of-pocket expenses are still possible when you’re insured. There are two reasons for it — let’s explore them below.
Out-of-Pocket Deductibles — What Are They?
In most cases, you’ll always have to pay a deductible. This is the amount you have to pay before your insurance kicks in to cover the rest.
The amount this ends up being depends on the policy you picked, so it shouldn’t come as a surprise.
On average, most drivers pay a $500 deductible, but you can select higher or lower amounts to affect your premiums. The higher you allow your deductible to be, the less you’ll pay in monthly premiums.
Are There Other Kinds of Deductibles?
Sometimes, you might opt out of involving your insurance and purposefully pay out of pocket. But why would you want to do that? Here’s why:
- Cost of Repairs: In the event of a minor fender bender where the damages are inexpensive, the repairs might be less than your deductible.
- Filing a Claim Raises Your Insurance: In almost every case, filing a claim will cause your monthly premiums to increase for a few years following the accident. Paying for the repairs with your own cash or an installment loan may be a viable option if either cost less than an increase. However, this option probably doesn’t make sense if your car is totalled, and you need to visit a dealership for a new vehicle.
Know Your Out-of-Pocket Expenses and Be Prepared
Some out-of-pocket expenses are unavoidable, like your deductible. But others might be optional, like if you choose to forgo filing a claim to protect your premiums.
Before making any decisions, find out how your insurance works so that you can make the best choice possible. And remember, while online installment loans are a great backup in an emergency, savings are always your first line of defence against an unexpected expense.