New Cars vs. Used Cars

There are a variety of factors that affect how much you will pay for your car insurance rates including your geographic location, gender, age, car insurance history, and credit report. Another factor is the type of car you drive and whether that car is used or new.

Typically, the newer the car is, the more it will cost you to insure that car. This is because newer cars cost more in terms of claims and repairs. Older cars are not worth as much as newer ones, so the costs to repair them will be lower, which means the insurance rates are lower, as well.

Whether you have a new car or a used car, your goal is to cover yourself in case of an accident and to do so for as small amount of money as possible. If your new car is totaled and needs to be replaced, this will clearly cost the insurance company much more than if the same thing happened to a 20-year-old vehicle.

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One thing that does not change whether or not the car is new or old is your liability rates. Age has no effect because the damage caused to other cars in accidents is just as bad when it is caused by an old car or a new car.

If you are driving an older vehicle, you may not really need the highest coverage limit possible for comprehensive insurance or collision coverage. If the car is not worth more than, say $5,000, you will not need coverage for more than that amount. Used car owners may not even opt to have damages inflicted in an accident repaired, especially if the car is already dinged up. It may be simpler than filing a claim.

Another option to lower your car insurance rates on a used car is to raise your deductible. This may mean higher monthly payments, but it is smarter for those with new cars to lower their deductible. Your first consideration should be how comfortable you feel committing yourself to making a certain payment in the case of an emergency. Whether you have a new car or an old car, your decision on deductible amounts and policies to purchase ultimately depend upon what makes sense for your bank account.

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