Should You Buy Used To Save On Auto Insurance Premiums?

Written By: Mari Cates on July 5, 2010 No Comment

Can you get cheaper auto insurance if you purchase pre-owned instead of new? This question seems like a simple one but it is not that simple to answer! The total value of the vehicle will matter, but so do many other things you have to consider.

A used luxury vehicle that still costs many tens of thousands of dollars may well cost more to insure than a sedate and common sedan. You have to consider vehicles that would be the same, or similar, makes and models. If so, you probably can lower your premiums quite a bit by purchasing an older car.

Insurance companies look at many different factors when they set premiums. Auto safety features, anti-theft devices, repair costs, and the car’s value will matter. In some cases, a new car may already have anti-theft or safety features that will earn discounts. In other cases, the older car will cost less because it has a lower value.

Here are some tips to save money with an older vehicle. Most of us have to purchase a liability policy in order to be a legal driver. But we may only need to purchase full auto coverage because a lender requires it. If we can afford to get an older vehicle paid off, we will not have that requirement.

Now you must consider the decision to pass on full auto coverage because it means you assume more risk. But it can save you a lot of money every month, especially if you are covering a higher risk driver. So it is up to you, and your insurance agent, to balance the cost vs. the risk.

You can also pass on GAP insurance if your auto is paid off. GAP insurance covers the difference between the book value of your car and the amount left on your loan. These days, many people find that they owe more on their cars than the actual stated value of the car. This can happen on newer or older cars.

Find out how much a car costs to insure. Stop by to compare car insurance with simple online quote forms.