How Your Finances During the Pandemic Are like Science Fiction

When your credit cards and student loans are deferred, it’s like being frozen in time. But, there’s also a monster hiding behind you…

Fortunately, there are powerful tools to prevent financial ruin from continuing, both in the public and private sectors: forgiveness of payments and postponement.

What do those two terms mean?

Before discussing the differences between the two terms, let’s talk about their great similarity. Both allow you to temporarily stop paying what you owe for your debts. Whether it’s your mortgage, your student loans or even your credit cards, payment forgiveness and deferment mean you’re exempt from making payments due to an extreme situation.

These terms existed before COVID-19, but obviously it has been shown to be the most extreme situation of our lives. So not only does the federal government offer these debt relief programs, but also many private lenders. Sounds great! What could go wrong?

This is the problem

You should think of forgiveness of payments and deferment of payments as a time of detention. As in sci-fi movies, when time freezes and everyone stops in your way, so do your lenders.

Time stops. But like in those sci-fi movies, it doesn’t stop for everyone. Some characters escape the freezing of time. They walk through the frozen landscape, keep doing things and advancing in the plot.

The same is true when you are in pardon or deferment of payments. But what keeps moving is not the plot, but the interest rates. In most cases, you have obtained a deferment to pay off your debt, but not for interest that accrues in your debt.

Suppose you have been terminated or fired because of COVID-19, and you have a balance of $1,000 on your credit card, which has an interest rate of 20%. You call the number on the back of your card and ask for help. Almost all credit card issuers offer some kind of program that decreases or eliminates penalties or even allows payments not to be made.

Here’s the thing: as long as your payments are frozen, your interest rate isn’t. Keep running, adding up more fees you’ll have to pay once they thaw.

Deferral vs pardon of payments

So you’ll wonder, does this interest rate situation apply to both deferral and forgiveness of payments? And, in any case, what’s the difference between them?

As Business Insider has so eloquently said, “these two relief options are very similar, and many people use them interchangeably – yes, even loan and finance professionals.”

Most of the time they work the same, however, they differ in:

Deferral usually means that interest doesn’t accrue while you’re not making payments. Forgiveness of payments usually means that interest does accrue.

However, you can’t trust those words, you have to look closely at the fine print of any agreement you make with your lenders. You may find that you’re signing a strange combination of these two terms. For example, there may be a freeze in interest rates for several months, but if you continue to freeze payments, interest rates will come back into effect.

There’s a big problem with both terms

Let’s say you’re already 30 days behind in paying a debt when the forgiveness or deferment period began. Unfortunately, your lenders don’t forget that fact. You won’t be charged late fees and fines during the deferment or forgiveness period, but it won’t change your circumstances in the previous days.

That’s why I’m so concerned about these pandemic-related programs. Don’t get me wrong, I think they’re powerful tools to keep those living in America from sinking into a deep debt they’ll never get out of. However, they have a history of not thinking long-term when it comes to debt.

Delaying debts doesn’t eliminate them

This should be a daily mantra for anyone who is using deferment or forgiveness of payments during this pandemic. Although you can delay payments without accruing interest, you still have a big problem: you still owe the money.

Going back to the sci-fi analogy, just because your mortgage is frozen in time doesn’t mean your house is frozen. Just because your car loan has been deferred doesn’t mean the wear and tear of the vehicle is frozen.

Reviews on Auto Insurance

Having vehicle insurance for some people is still considered less important. They think there’s no point in insuring their beloved car. Anyway, if the car is driven in a careful manner, then the possibility of an accident will not happen. The myth is that the way car insurance claims are difficult, the procedure is convoluted until the funds needed are liquid.

But all those assumptions are not true, because you have to understand if the car insurance has many benefits that are profitable. Car insurance is not only limited to compensation in the event of an accident, but also as a maintenance investment. Just imagine if you get redress for any risk that happens to the car. Of course, don’t worry about spending a lot of money to just fix it. For example, your car accidentally hits the fence of the house so that it makes the front of the car blister, then you don’t have to spend money to fix it because it will be financed by the insurance company.

By having vehicle insurance, all of these risks can be minimized because there are many expansions of attractive protections that are offered by insurance companies. How to buy car insurance is also easier in the online age as it is today, of course, you can already buy car insurance through the online system.

How to Buy Car Insurance Online

The main convenience that can be directly felt from buying insurance online is practical. It doesn’t take much time because all the processes ranging from transactions, application processes, status updates and checks are done online. Of course this will not interfere with your other activities as purchases can be made anywhere and anytime (real time).

In addition, you also do not have to bother submit the necessary documents to register such as ID card, driver’s license, registration and others. This is because all documents can be uploaded over the internet. Filling out the insurance application form is also done online. Check out the following careful review tips on buying car insurance online:

1. Compare Insurance Products

Everyone wants the best insurance product for their car. If you can all the risks that may occur covered all by insurance. Therefore, make a comparison between one insurance product and another similar product before purchasing. This way you can do this online through a comparison site that offers car insurance.

Take a look at the great deals provided by insurers to protect your car later. Not all insurers offer the same protection. In terms of insurance policies and interest alone each company is different.

But keep in mind, not that offering the lowest insurance premiums means the cheapest, just look at the cheap insurance policies offered if they provide coverage that’s already to your liking. It means whether the insurance provides comprehensive coverage or just for certain things only.

In addition, you can also read the testimonials of people who have submitted certain insurance products for reference. From there it can also be considered whether the insurance product is the one you are looking for.

2. Choose the Appropriate Car Insurance Type

Basically there are two types of insurance coverage offered namely All Risk and Total Loss Only (TLO). The difference lies in the type of protection provided. For All Risk insurance, the insurance company will cover all the risks and damage to your car. This means that any minor, severe to loss damage can be covered by All Risk insurance.

Unlike All Risk insurance, Total Loss insurance will only cover losses that cause more than 75% damage to the car or the vehicle to be stolen. For minor damages, this type of insurance cannot cover it. However, when it comes to premiums, this type of insurance is cheaper. This should be understood, and determine the type of car insurance that suits your needs.

3. Add Protection Expansion

For those of you who have considered insurance only for protection when the car is damaged by accident or lost due to theft only, means not yet understand properly about the benefits of insurance. Currently, insurers have expanded their type of protection against possible risks known as extended coverage

When purchasing insurance, you will be given the option of expanding the desired protection. Later the selected expansion will be added to the car insurance policy and will be included in the insurance premium. The expansion of coverage offered by insurance companies includes, rioting, natural disasters, terrorism, sabotage, body injury or death to passengers, passenger liability and third party liability.

Of interest is the responsibility of third parties. By choosing the extension, the losses suffered by third parties are also the responsibility of the insurer. For example, if your car is involved in an accident involving another car, so you should not worry about paying compensation because with this protection the insurer will cover it.

4. Take a Look at the Insurance Claim Process

Sometimes the thing that makes people want to buy insurance is the process of claiming that is considered complicated, when it is just a thumbs up. As long as you know and do not violate the procedure, your insurance claim process is easy to process. The insurer will also be happy to assist you in managing your claim. Don’t be afraid to ask them.

Understand all the information about your car insurance claim online. Each car insurance product has a clear and informed claims procedure. In case something happens to the car, you can immediately report it to the insurer. Do not delay to report due to the deadline to report in general 3 X 24 hours. After that prepare the required documents, this is not as complicated as expected because you only need to prepare your driver’s license, registration, insurance policy, as well as a certificate from the local police. Don’t forget to also attach a claim form that must be filled out and signed.

After that just wait for the process from the insurer until giving the green light to take your car to the nearest partner workshop. The car will soon be repaired by the mechanic and the vehicle will also be ready for reuse.