Increasing the deductibles can save on car insurance costs but the tradeoffs could hurt credit challenged car buyers on tight budgets

Full Coverage Car Insurance

Automobile Gap Insurance with Problem Credit

One of the lender requirements when financing a vehicle even with bad credit, is full coverage auto insurance. So it's certainly no surprise that borrowers are always looking for ways to save money on their monthly premiums. But is increasing the deductible level really such a good idea and how much would the average driver save by doing this?

Auto Insurance Deductibles

We were reminded of this issue earlier today after reading a press release from

Calculating rates using data from the largest carriers in each state, the online insurance quotes website found that drivers could save an average of 9 percent on their auto insurance premiums by increasing their deductible from $500 to $1,000. Going even further, increasing the deductible amount from $500 to $2,000 produced an average savings of up to 16 percent. also noted, however, that much of it depends on where you live. In this case, drivers who increase the deductible from $500 to $1,000 and live in Massachusetts (19 percent lower), South Dakota (14 percent lower) and Kansas, Wyoming and Iowa (all 13 percent lower) will save the most. Those living in Michigan (4 percent lower), Florida (5 percent lower) and Louisiana, North Carolina and Nevada (all 6 percent lower) will save the least.

Mixing High Deductibles with Poor Credit

The only issue we see with this course of action is that many credit-challenged borrowers are on tight budgets. While they may save $20 to $30 a month on their car insurance premiums, coming up with $500 to cover the deductible is often difficult enough. What if these borrowers had to pay $1,000 or even $2,000 out of their own pockets to get their vehicle repaired? In those instances, cheap auto insurance may not be worth it.

With the small savings for drivers living in Michigan or Florida, making this kind of move certainly doesn't make sense. But even borrowers living in Massachusetts and South Dakota should look long and hard at their budgets – especially if they have poor credit scores and are living paycheck to paycheck – before deciding to raise their deductible.

The Bottom Line

Raising the deductible amount on their auto insurance policies certainly can save drivers money on their monthly premiums. But those consumers with little wiggle room in their monthly budgets would do well to think twice before making a move.

One more tip: Auto Credit Express specializes in matching consumers with damaged car credit to dealers that can offer them their best chances for approved car loans.

So if you're ready to reestablish your credit, you can begin now by filling out our online auto loan application.