Driving Less but Saving More on Auto Insuranceby Steve Cypher on Thursday, November 1st, 2012
Car buyers that plan on financing a vehicle with a bad credit auto loan often find themselves on a tight budget due to the high costs of auto insurance.
We’re familiar with this situation here at Auto Credit Express because we’ve spent the last twenty years helping consumers with credit issues find dealers for their best opportunity for auto loan approvals.
In many cases the car insurance premiums these buyers are charged are higher than those for other drivers because, in some states, insurance rates are based, in part, on the FICO scores of the primary driver. But there is a form of car insurance that, even under these circumstances, could make their auto insurance premiums more affordable.
Like many insurance companies, GMAC Insurance offers a discount to drivers that drive lower-than-average miles in a year. Called pay as you drive (PAYD), it’s a form of auto insurance that, in addition to the usual factors, calculates a portion of your premium by how far you drive. By taking into account the lower risks that lower mileage poses, it gives these drivers a discount over what they would normally pay.
“For those people who annually drive fewer than 15,000 miles, the Low-Mileage Discount can help them save money on their auto insurance throughout the year,” says Wade Bontrager, senior vice president of GMAC Insurance.
Although OnStar subscribers are eligible for an immediate discount from GMAC Insurance that comes from an active subscription, these same customers are also eligible for low mileage discounts that can be as high as 54 percent (based on annual mileage of less than 2,500).
So how is this done?
If you’re familiar with OnStar, you’ll remember that the system comes with an onboard diagnostic capability. Using this technology (and with the customer’s permission), GMAC receives a monthly odometer reading from the customer’s vehicle. With this information as a verification tool, GMAC Insurance will apply the appropriate discount (it should be pointed out that only distance, not locations or speed, is contained in the information).
PAYD Auto Insurance States
The low mileage discount for OnStar subscribers is currently available, according to GMAC Insurance, in 35 states (Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia and Wisconsin). More information can be found at the OnStar web site.
As we see it
PAYD auto insurance, such as the GMAC Insurance program, could certainly help low-mileage drivers with credit problems – particularly in states where auto insurance rates are, to some extent, based on credit scores.
One more thing to think about: if you’re facing problems with your car credit, Auto Credit Express can help you find a dealer for your best chance at auto loan approvals.
So if you’re ready to reestablish your auto credit, you can begin now by filling out our online car loans application.