Tuesday, June 21, 2005

Carless in California

I'm going to San Jose, California from August to December this year, and I need to get a car to commute to work and dances and such. In recent days, I've been trying to work out exactly how to solve this problem. I figure that one day, somebody may be in a similar position, and this will be able to save them some time and effort.

If you need a car for 5 months, the everybody in the automobile market hates you. I can't figure out why. As far as I can tell, you have no good solutions. You have several options --- You can buy, you can finance, or you can rent.

Buying. One option is to go to California, and buy a car. If you want to keep the car, this is a great option, although you will have to drive or transport it back to your own state when you're finished with your internship. If you want to sell it at the end of your internship, you run two risks: (1) You need to sell it privately, in which case you might not find a buyer before you have to go home, or (2) You need to sell it to a dealer, and take a several-thousand dollar loss (according to Kelly Blue Book rates). Another option is to buy a clunker. If you can find a decent enough car for 3000-4000$, you may be in better financial shape than if you, say, rented a car...But you may lose if the car ceases to function immediately after you buy it.

Financing. No dealer will loan or lease a car to you for 5 months, apparently, so you have to finance for the traditional 24, 36, or 60 months. If you want to keep the car, you need to choose a term that will keep the payments reasonable for you. Otherwise, your best bet is to do a "lease transfer," essentially selling the car/financing-agreement to somebody else. There are websites that provide online lease transfer markets, but none of them is very large. The odds of not finding a buyer for your lease seems fairly high.

Another option is to look for somebody trying to transfer their lease, that has only a few months left on their lease. This would be a really good idea if you can find such a deal, but there are two drawbacks. The first is the small size of the transfer markets. The second is the fact that there's little incentive for somebody with a few months remaining on their lease to go through the hassle to transfer the lease.

Renting. Apparently, all major car rental agencies have long-term rental programs. The rates are much more reasonable than their normal daily rental charges, which is a good sign. You can go with the standard rental agencies (Hertz, Budget, Avis), which will be about 600$ per month for an economy car. Alternatively, you can go with a company like Rent-a-Wreck, which will be about 350$ per month.

The major complication with renting is insurance. If you get the rental company's collision or liability insurance, it will surely cost you a huge amount of money, at least 9$ per day, or about 300$ per month. If you have your own insurance, you have to make sure that it covers a rental car for such a long time period. My carrier (geico) only provides liability for rental cars, and no collision protection. Making matters worse, insurance agencies will typically refuse to insure a car that you do not explicitly own, so you cannot simply add the rental car to your insurance for a few months. This fills me with deep hatred and loathing for insurance companies.

The only insurance option that I found that seems reasonable is to rent the car with a credit card that provides collision insurance. My Chase VISA card provides such insurance, but will only cover rentals for up to 15 days. My Discover card, however, will cover rentals for up to 31 days. The solution, apparently, is to return to the rental agency every month, and re-rent a car.

I pray to the greater dieties that perhaps, one day, this story will become defunct, because short-term car rentals or financing will become doable. Until then, hopefully, this will save somebody the pain and suffering I had to deal with.

Comments:
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There are different types of insurance coverage available, thus the best question to ask when applying for insurance, is which policy is available to me. In the beginning of the 19th century laws were passed stating that anyone driver a motor vehicle is by law obligated to have a measure of coverage. The drive can take out full coverage, or else �third-party� coverage, which will protect them in the event an accident occurs. The policy will keep you out of the arms of the law even if you are pulled over for a traffic violation, by protecting you from getting citations, fines, jail, or towed vehicle for no proof.

Third party will offer a measure of protection, however it will not protect you entirely if an accident occurs, and most likely will not cover you if your car is stolen. If you possess a �High-Performance� or �Classic� vehicle, then you will need supplementary coverage, outside of third-party coverage. In fact, you will need full coverage, plus the supplementary coverage to protect your vehicle. The coverage offered to these customers is to protect them extensively, since the risks are higher and the cost of repairs on such vehicles is twice more expensive than standard vehicles.

If you only take out third-party insurance on a high dollar vehicle, then you will pay the cost of repair and suffer losses in the event you are in an accident, unless the other driver is at fault. However, if that driver is at fault, still you may pay the cost that is not covered under the other drivers insurance if he too has third-party coverage. The third-party coverage will cover drivers on �public roads,� or private roads.� The policy may offer limited coverage for �legal liabilities� and �passenger indemnity.� The passenger indemnity means that if you are driving and your passenger hit�s a parked vehicle with the passenger door then you will be covered. The coverage may offer protection against fire and theft also, which will provide you a measure of coverage in the event your car is stolen or fire occurs. However, you must read the terms and agreements carefully, since some third-party coverage is minimal and will not offer this protection. On the other hand, comprehensive full coverage will defend you on nearly every possible occurrence. Comprehensive full insurance coverage �is the complete form of car insurance� that �adds accidental damage� coverage �to the 3 policies discussed.�

The comprehensive coverage can protect you, despite the level of damage, and will cover you on many �personal accidents� in the event you are injured. Third-party coverage was not planned to provide the coverage that the comprehensive policies bring. Third Party Only is a liability policy that will prevent you from charge if you cause an accident. The Policy will provide a measure of assurance that if you are in an industrial accident �the innocent party�s repair/replacement costs are insured against.

Thus, insurance coverage is different and most companies base the pricing on age, driving history, gender, type of car, and so forth. Regardless of the type of insurance you are seeking, all policies have premiums. The companies will often ask customers to provide an estimated guess as to how many miles you drive each year and this too will affect your premiums. Most companies estimate that drivers should only drive around 12,000 miles per year, but it depends on the company. Furthermore, under law you are responsible for your vehicle, therefore, if you are seeking insurance coverage and intend to allow other drivers to drive the car, make sure you get coverage for other drivers, otherwise if the driver causes an accident, by law you will pay for the damage, loss, death, and any other problem the accident caused. Thus, if you have a new car, high-performance vehicle, and other risky materials or issues that can increase your premiums, take not of each area that may be considered a high risk and point this out to the agent ahead of time. It makes sense to get several quotes if you pose a potential high risk to find the best rates on car insurance plans.

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