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.
For example, you may find that an older custom sports car or classic car costs quite a bit to cover. A newer car that has low repair costs and safety features may be quite affordable to cover by comparison. But let us make the question fair, and so we will compare oranges and oranges. For a similar type of car, you can probably save some premium money by buying used.
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.
This is something you should think about. You will, of course, have to make a risky move in case you do have an accident. Make sure you learn about the benefits and disadvantages before you decide to save money like this.
One other way to save money on an older car, with a paid off loan, is by skipping GAP insurance. This protection only covers the ‘gap’ between your loan balance and the book vaue of the car. Since there is no loan balance, you will not need to purchase this policy at all!
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