When it’s time to upgrade your existing ride, there are many options out there to choose from. One factor that is going to have a big impact on the price of your new car insurance policy is the age of your vehicle. You may want to consider the price of insuring a new car compared to the price of insuring an older vehicle. Auto insurance is a major cost for most people, and they have to consider how much money they are spending on insurance when they budget each month. If you have noticed your auto insurance rates are dipping into the rest of your budget, you have other options to consider. Could your rates be lower than you think?
Which is Cheaper?
Determining whether insurance on an older car or a new car is cheaper can be more difficult than you may initially think. Typically, newer cars are more expensive to insure. However, there are many factors that can alter that statement.
It’s best to understand the various factors that go into determining an insurance quote so that you can more accurately determine if a new or used vehicle will likely be more expensive to insure. Sometimes newer cars have safety features that are considered when coverage costs are calculated. Some used cars might be worth more than new ones.
The Type of Vehicle
The biggest factor in determining the insurance rate for a policy is the type of vehicle it’s for. Vehicles that cost more to replace are going to be more expensive to insure. If you purchase a newer pickup, it’s going to cost more to replace than most regular sedans. A good rule of thumb is to associate a low replacement cost with cheap car insurance. Luxury cars, even used ones, are going to cost more than entry-level cars.
The Type of Coverage
Another major factor that contributes to the overall price of a car insurance policy is the type of coverage. Collision and liability insurance are two of the most common out there. Collision coverage will cover the cost of replacing your vehicle if it’s damaged in a car accident. Liability insurance doesn’t, which makes it the cheaper of the two options. Determine if the cost of repairing or replacing your vehicle outweighs the cost of your monthly insurance or not.
Getting Quotes
One of the best ways to help accurately estimate the price of car insurance for a new or used vehicle is to get quotes from different insurance companies. Most providers offer online price quote tools that can allow you to discover a price estimate for different types of vehicles that you’re thinking about purchasing. It’s always good to get some price quotes on different vehicles so you can be prepared for the cost of your insurance.
Don’t Take the First Quote You Receive
One of the first things you need to know is that quotes can vary wildly based on different circumstances. Receive quotes from different auto insurance companies before you commit to a specific company. It also does not hurt to receive a quote from other companies even if you already have a policy. You may want to switch if you find a better option.
Additionally, don’t be afraid to mess with the deductible when you assess the premium you want to pay. Changing your deductible by raising it will help you pay a lower premium each month. The catch is that you will pay more if you need to use your insurance plan.
See If You Qualify for Discounts
Certain types of discounts may be available for people in your situation. For example, you may be eligible for discounts on auto insurance if you are a good student, have had no accidents in recent years, or want to bundle different types of insurance options. Some auto insurance companies will also offer you a discount if you pay semi-annually for your insurance rather than monthly. Some companies offer discounts depending on the type of car you choose, like an all-electric car.
This is one more reason to shop around when looking to lower your costs. Don’t be afraid to ask the insurance agents over the phone about any discounts they offer. There could be discounts that aren’t being actively advertised.
Check Your Credit
When you have good credit, you have paid your bills on time and you are in good standing on your loans. Auto insurance companies recognize a link between credit score and people’s claims. If you have a ‘fair’ or ‘good’ score you could be paying a lot more than somebody who has an ‘excellent’ score. Pay attention to ways you can improve your credit score today to see a change in your premium next year. You might find you are paying hundreds more each year than you need to be. Building up your credit score isn’t fast or easy, but there are many benefits if you put in the effort.
Consider Exchanging Cars
If you were unhappy with the quotes you received it may be time to look at a car that could offer you a lower rate. You can also save money by paying off your car loan quickly, especially if you plan to lower the amount of coverage when you no longer have a loan on the vehicle. You can take the time to think about if a new car or a used car will fit into your budget better.
As you work on making the decision of whether a new or used car is best for you, you’ll want to take into account the cost of a new insurance policy for the vehicle. While older vehicles tend to have lower insurance rates than newer vehicles, that’s not a steadfast rule. By utilizing the information above, you can work to determine whether you want to invest in a new or used vehicle.
Do you have questions about auto insurance policies and the prices available for you? Getting in touch with a local auto insurance agent or calling about your policy can help.