The Nissan GT-R has been a hot car this year, winning prestigious industry awards such as Motor Trend’s “Car of the Year.” If you’re looking to save on insurance costs, don’t expect to be cruising around in this sports car anytime soon because Nissan’s GT-R takes first place in another arena: insurance costs. The GT-R is ranked 2009’s most expensive vehicle to insure, totaling in at an average premium of $2,533 according to Insure.com. Your best bargain insurance-wise would be the Hyundai Santa Fe, which has the lowest insurance premium averaging at just $830.

While auto insurance can be pricey, many financial emergencies are caused by major life events such as car accidents or medical conditions, so maintaining adequate insurance is one good way to stay protected from financial ruin. With all the different types of auto insurance available, understanding what you are getting for your money is important.

-Liability is the most important type of insurance and is required by state law. It covers costs associated with property damages or bodily injury caused by you or a member of your family in an accident.

-Collision insurance will pay for the repairs if your car is damaged in an accident.

-Comprehensive insurance pays for damage to your car from factors other than collisions, such as damage from fire or vandalism.

-Uninsured motorist coverage protects you if you are ever in an accident caused by an uninsured driver. It may also protect you against a hit-and-run.

-Personal Injury Protection (PIP) pays medical expenses and lost wages for you and your passengers if you are injured in an accident. If PIP is not required in your state, and you have good health and disability insurance, you can skip purchasing this type of protection or just get the minimum coverage.

-Medical payments (MedPay) will guarantee immediate medical payments regardless of who is at fault. It also covers you and members of your household in any accident involving an automobile, even if you are walking or riding a bicycle.

-No-fault insurance is required in many states. With no-fault, your insurance company would cover your expenses in an accident regardless of who was at fault. Other drivers would be covered by their own policies. This type of insurance eliminates the need for accident victims to establish another’s liability in a lawsuit.

When taking out an insurance policy, finding coverage that meets your needs and the requirements of your state is a top priority. Remember that your insurance must also be affordable.

-Ask your insurance company about discounts. You may be eligible for discounts for being a safe driver, good student, or college graduate.

-Remember, your credit matters. Car insurance companies take your credit rating into account when creating a policy for you. Insurance companies view credit reports as predictors of risk: if you’re responsible with your finances, you’ll be responsible with your car.

-Shop around. Web sites like Insurance.com and Esurance.com let you comparison shop major auto insurance providers to find the best policy for you.

While I am all for helping the economy and the environment, the awesome thing about a clunker is that is (hopefully!) paid for in full. If you are one of the more than six hundred thousand who got cash for your clunker, you are the proud owner of a new car… and possibly some new debt.

Let’s run some rough numbers. The popular Honda Civic costs around $21,000. If you qualified for the full $4,500 CARS credit for your clunker, that leaves you with $16,500 owed.

Loan amount:         $16,500
Interest rate:                   9%
Loan term:          48 months
Monthly payment:   $410.60

The fact that many people were in a rush to beat the program’s deadline concerns me. A National Automobile Dealers Association economist was interviewed for a recent Newsweek article saying that he believes that “as many as 40 percent of the cars purchased under Cash for Clunkers were bought by people who would not have bought a new car in this calendar year.”

Adding more than $400 to your monthly obligations is not something that most people can do without a lot of planning. To make matters worse, according to Insurance News Net, insurance costs for some new-car buyers could be minimal; for others, it could be $500 or more a year.

If you find yourself suddenly facing a dramatic increase in your monthly credit obligations—for any reason—you will likely have to adjust your spending in other areas to compensate (giving a car back is not a realistic option). Thankfully, there are several budget areas where you can make quick cuts. Check out previous blog posts for quick ways to reduce your expenses on items like:

-Food
-Energy
-Childcare
-Pet care
-Travel
-Entertainment
-Gifts

Plus, this great post from the Bargain Babe on 13 ways to reduce your spending.

For many years, I had a secret identity. I was “Susan” of the MMI’s “Ask Susan” advice column. The truth of how this came about is far less exciting than it seems—I inherited the column from someone named Susan.

After answering more than 30,000 questions, I “retired’ from the column. Today, the column is called The Advice Team and questions are answered by some of the most qualified people in the industry. Thankfully, I still get to fill in when one of them goes on vacation because I really love talking (or in this case, typing) with people one-on-one. During my most recent stint as a substitute, I noticed that several people were worried about how their personal relationships are being negatively impacted by money. In case you are struggling with the topic of friends and finance, following are a few of the questions I received and answered.

Dear Advice Team: I let my friend and his wife borrow $2,500 more than a year ago. They are making payments as agreed, but I can’t help to get annoyed when I see them spending money frivolously. They even went on a trip recently—I can’t even afford to do that! What can I do about this situation? -Steve, Minnesota

Steve: While you may not agree with all of their spending decisions, at least they are keeping their promise to pay you back. I believe that when you lend someone money, it is important not to assume a position of power. Being too authoritative could damage your friendship.

•••

Dear Advice Team: In October, I loaned my friend of 12 years $4,000. I wrote her a personal check for the amount of the loan. She verbally agreed to pay me back all of her income tax refund. Well, she got her income tax and spent it all, without notifying me. I called her and she said that she would pay me $100/week until balance was paid. That was three weeks ago and I haven’t heard from her. I am a single parent and trying to go to school. She knows I need it. What can I do? -Cheryl, Phoenix

David: I am sorry you are dealing with this delicate issue. Since your friend has not kept her end of the bargain, it is past time that you begin treating the loan like you would any other business matter. Discuss the terms of the agreement and put the details in writing. Be sure to list both parties involved, the interest rate, due dates, payment amounts, and penalty for late or missed payments. Document the date and time of any letters or phone calls, and be sure to make note of all the responses to your attempts. Your records may be necessary if you plan to take the matter to court, or if you plan to write the debt off as non-business bad debt on your next tax return.

•••

Dear Advice Team: I recently co-signed for a car loan for a friend. This “friend” has duped me and she won’t pay. My question is: how can I get my name removed from the loan? I don’t want to pay for a car for her. Her name is on the title and she has a car free of charge! I have learned my lesson; I just want to know what can be done—before my credit is ruined. -Mark, Tennessee

Mark: Helping someone obtain their goals can be very rewarding; however, far too many friendships end when money is involved. Unfortunately, there is no simple way to “remove” your name from a cosigned loan. In order for the primary borrower to assume total responsibly for the debt, she would have to apply for a new loan and qualify on her own. (I am assuming that this is not possible or you wouldn’t have been asked to cosign in the first place.) Talk to your friend about selling the car and repaying the loan. Seek mediation if necessary. If this is not possible, you might consider protecting your credit rating by making the payments to the creditor yourself and then collecting from her. Because the stakes are so high, I recommend that you seek legal advice to understand your rights and responsibilities.

•••

If you have a question for the Advice Team, please don’t hesitate to ask!