What is Collateral Protection Insurance?

http://www.mexperience.com/guide/essentials/transport/mexico-auto-insurance.php

If you have a loan for your vehicle in Wisconsin, you are usually required to prove you have insurance on that vehicle. Most financial institutions do not accept ‘liability only’ insurance for this, which is the bare minimum required by law. They generally require full coverage, which includes comprehensive and collision coverage.

So, what happens when your insurance comes due and you can’t afford your policy? If you go more than 30 days without insurance, Horizon Community Credit Union will send a letter asking you for your insurance information. After 60 days, another letter is sent. The 60-day letter says without proof of insurance your account will be assessed with a Collateral Protection Insurance (CPI) policy.

Some people think that this is a pretty good deal! This way the insurance goes right on their loan and they don’t have to worry about coming up with the premium money. Trust me, a CPI policy is not a good deal, and here's why:

1. It’s VERY expensive and only lasts for 1 year. Each year that the policy is assessed, more will be added to your loan. Your required payment will also increase.

2. This policy does NOT qualify as 'liability only' coverage. Remember, Wisconsin requires all vehicles to, at minimum, have 'liability only' coverage. If you get pulled over and the officer asks for proof of insurance, CPI doesn’t qualify.

3. This insurance only covers the loan amount with the credit union, not necessarily what your vehicle is actually worth. If you were to be in an accident, a CPI policy may not pay for any repairs. In the event of your car being a total loss, the CPI policy probably won’t pay much more than what the amount of your loan is.

So if your insurance is getting too expensive, be sure to shop around and find a rate you can afford. Having your own car insurance coverage will be cheaper than the CPI policy we would be required to put on your loan. Any questions? Please feel free to call the Horizon Community Credit Union at 920-433-0122.

Post by: Mary D.

Free Up Cash & Increase Your Financial Cushion

As a nation, America is not great at saving. More than 55% of American households have less than one month worth of income in liquid savings (cash, or savings or checking account). Are you one of them? Even taking into consideration retirement accounts and investments, the average family can only replace four months of income in the case of an emergency. Here are a few tips for increasing your savings and curbing your spending:

Consolidate Debt: By consolidating credit cards or loans, you can often save on interest and lower your total monthly payment, not to mention simplifying it, by just having one payment to make. The key to consolidation is to cut up those old cards, then, or close them all together. Consolidating won’t help you at all if you turn around and run up even more debt again!

Refinance Your Mortgage and Vehicle Loans: You may qualify for lower rates if you refinance. Mortgage rates are still low, so if you haven’t refinanced in the last five years or so, check your rate and compare it to offered rates in your area. If you had a mortgage loan with private mortgage insurance (PMI) see if you have paid your balance down enough to remove that coverage. If it makes sense for you, you could also extend the term of your loans to decrease your monthly payment.

Go Green: Many companies offer a discounted loan rate for borrowers who set up automatic payments for their loans. Check to see if this is offered at your financial institution. Using automatic payments can also help prevent late fees by making your payment for you, on time, every month.

Review Insurance Coverage: When is the last time you really reviewed your insurance policies? Check the rates that you’re paying and compare your rates to those of other companies on the National Association of Insurance Commissioners website. You could save money on your monthly premiums if you raise your deductible. Make sure you’re covered for what you need, but not paying for things you don’t need. You may be able to get rate reductions or discounts if you have vehicles you only use seasonally, if you have children off at college who are not typically driving, or if you have a high school student getting good grades.

At Horizon Community Credit Union, our loan officers would be glad to review your current debt and look for ways to save you money. We have great, low rates on mortgage loans and vehicle loans. You can get loan interest rate rebates for having a checking account with HCCU, for having direct deposit and automatic payments, or for being a Gold or Platinum SunDrops member. Finally, we also have partnerships with insurance companies including Liberty Mutual and TruStage. If you don’t have a savings cushion, don’t wait for a financial setback, start taking steps today to keep more money in your pockets each month!

Image courtesy of iosphere at FreeDigitalPhotos.net

Post by: Erin S.