If you’re planning on buying yourself or your spouse a new vehicle, you may be worried that your already high insurance premium will only end up going up even higher as a result of your purchase. This can be especially important to you if you’re on a tight budget and you currently find it difficult to afford the car insurance plan that you’re on right now. The fear of buying a new car and dealing with the higher insurance rate on it may cripple you to the point that you decide against buying a new car altogether, even if you really need one because the one you’re currently driving is old and always in need of repairs.
But is there truth behind this fear? Do insurance premiums inevitably go up, no matter what, when you purchase a new car?
When Newer Cars Do Create Higher Insurance Premiums
If you are in the market for a new car, you may choose to go for a fairly new used car instead of a brand new car made in the current year. Generally speaking, the newer the car, the higher the insurance rate will be in order to cover it. The simple reasons for this increase in insurance costs include the fact that newer cars are more susceptible to theft and generally are more expensive to repair than older vehicles. So if you end up getting into a car accident while driving your new car and your insurance needs to cover the parts and labour to get it fixed up for you, the provider will be dealing with higher costs than it would if you had wrecked an older car.
Because of the risks of higher costs that come with newer cars, your insurance company will most likely pass those costs on to you in the form of higher premiums.
Used, Older Cars Can Save You Money on Your Insurance
Used cars have already depreciated in value, so the cost to replace them is lower than newer vehicles. Therefore, you typically can do without extra collision coverage when you’re driving around in an older car. When it comes to newer vehicles, on the other hand, insurance companies will typically recommend that you purchase collision insurance, and if you’re financing your car or purchased it as a loan, you’ll probably be required to have collision insurance.
When Newer Cars Don’t Lead to Higher Insurance Premiums
Sometimes you can purchase a brand new car and still get a lower insurance rate on it than you would on other, older models. It’s really all about the make and model of the vehicle. So if you drive a classic sports car that’s attractive to thieves, comes with a high price tag, and hasn’t depreciated in value over the years, you may actually end up paying more for your car insurance than your neighbour who drives a typical compact sedan.
Also, you will find extra savings on your insurance rate if your car is loaded with newer safety features. Therefore, with a new car, you may still get some great discounts on your insurance.
Damian Spate is an expert in all things relating to finance and insurance. When checking out the latest in car insurance, Damian often visits garethsquote.com.