Getting a Second Opinion Can Save You a Fortune

When making a big purchase or expensive repair, it pays to get quotes and ideas from more than one company

Getting a second opinion can be one of the best financial decisions you ever make.

If you have a financial decision to make —  a big purchase, an investment or an impending major repair — make sure you have the most accurate information possible. Because making a decision without all the facts can cost you a lot of money.

We all have to rely on the expertise of others to help us solve problems from time to time. All too often, though, the people that we turn to for insight stand to gain financially from us taking their advice.

In order to protect yourself from being taken advantage of, you need to make a habit of getting a second opinion.

Second opinions are common practice in health care. But it should be common in your financial life too. Just like getting a second opinion from a doctor could give you a valuable medical perspective, getting a second opinion on money issues can give you really helpful financial perspectives and maybe even save you a lot of cash.

Here are five areas in which getting a second opinion can save you a lot of money:

1) Home Mortgages

When it comes time to by a home, it seems like everyone you know has a mortgage broker to recommend to you. Most mortgage brokers do good work, but that doesn’t mean that you should automatically buy from someone just because a friend of family member recommended them.

Different brokers have access to different types of loan products, and some organizations might judge your creditworthiness differently than others. I’ve saved thousands of dollars over the years by getting a second opinion — and sometimes a third, fourth and fifth opinion — when shopping for mortgages. You should never commit to a mortgage until you’re sure it’s the very best deal available.

2) Home Repairs

If you own a home, you have to repair the things that will inevitably break down. Sometimes these are little things, like unclogging a drain. Other times, they’ll be major ordeals, such as replacing your roof or your heating and air conditioning system. The bigger the job, the more important getting a second opinion becomes.

Getting good information in the world of home repair may be even more important than in home mortgages. Because the home repair industry is full of a wide variety of contractors and characters. Many are very good, but some don’t do quality work. Most are honest, but some will take advantage of you.

When you have a big job coming, you should never hire the first person who gives you an estimate. I saved around $1,000 on an HVAC replacement a few years back by taking the time to shop around, ask detailed questions and negotiate with my providers.

3) Car repair

Repairs are an inevitable part of owning a car. There are plenty of  companies out there that want to help you fix your car. But the quality of service  they offer — and the prices they charge — can vary wildly.

The dealership that sells the make of car you own has a service department that can fix just about any car problem you have. Unfortunately, dealerships are notoriously expensive on car repairs.

When it comes time for a big car repair, spend some time getting a second opinion. You’ll likely find that there are hundreds or thousands of dollars in difference between the most and least expensive estimates you get. And a good, honest mechanic may even save you money by helping you avoid unnecessary repairs.

4) Insurance

You need insurance for all sorts of things: your car, your home, your health, and your life, among others. And you’ll likely buy each of those types of insurance on the open market. It’s tempting to buy all of your insurance through one agent, who may also be a friend. But this can be a really expensive way to go.

Insurance costs are all about risk, and every company calculates risk differently. This means that Allstate may offer you a substantially cheaper rate on car insurance than State Farm, or vice versa. The same is true for all types of insurance. So you should always shop around for the best rates on any insurance you buy.

Your friendly neighborhood insurance agent may only able to sell insurance through one company, which means that they can’t necessarily offer you the best deals. Since insurance is essentially a commodity, you should work to find the cheapest way to get the coverage you want. Just make sure the company you’re doing business with has a good reputation.

5) Investment

When you’re ready to invest for retirement, you’ll find all sorts of people who want to help. They’ll each have their own perspective on the best way to handle their money. In many cases, they’ll have investment products to sell you, and they will make nice commissions if you buy their products. So you need to be cautious about the decisions you make.

Some financial advisers give very conservative advice, while others will be much more aggressive. Some may try to steer you toward investments that you don’t really want to be in. And some will have hefty fees and commissions, while others may be more affordable.

You need to educate yourself on investing before doing business with any adviser or broker. Talk to a range of advisers to find out about their expense structure and their financial perspective. Since investing well can make you a millionaire by the time you retire, this is one deal that you should be sure to get right.