When you are shopping for a vehicle and you are deciding between a new or used vehicle, there are many factors to consider when evaluating the overall costs of that purchase. One of those factors should be the cost of insurance. According to the professionals at J. P. Perry Insurance, auto insurance is very specific to the vehicle and the person buying a vehicle. So it is impossible to offer a general statement regarding which is less costly to insure. Your rate will depend on your driving history, the make and model of the vehicle, the level of coverage and the insurance company you choose. But here is some information that can help you decide whether to for go for new or used.
General Assessment - Expensive cars, particularly new, are more costly to insure because of the cost to replace and repair. Older cars are typically worth much less, so they are less costly to insure. Research has shown that auto insurance rates drop by 3.4% for every year the vehicle ages. So an eight-year-old vehicle is approximately 25% less to insure than a new vehicle.
Coverage Levels - If you purchase a new vehicle through a loan or lease, you may have to carry additional coverage not required for a used vehicle. This could include minimum levels of collision, comprehensive and gap insurance.
Comprehensive And Collision Coverage - These provide protection for your vehicle in the event of an at-fault accident. While most states require liability insurance, comprehensive and collision is only mandatory if specifically stated in the lease or loan. If the vehicle is worth more than $4,000, J.P. Perry recommends comprehensive and collision coverage.
Gap Insurance Or Loan/Lease Payoff - These coverages are specific to new vehicles. They cover the cost if the vehicle is totaled and the payout from the insurance company doesn't cover the original loan of the vehicle, which is usually due to the vehicle's depreciation.
Vehicle's Risk Of Being Stolen - If a certain make and model is more likely to be stolen, insurance companies may charge extra for that risk. While this could affect used vehicles, it mainly applies to new vehicles. Where a person lives (zip code) and where the vehicle is parked can also be a factor.
Vehicle's Safety Record And Safety Features - Both of these factors can affect premiums for both a new and used vehicles. A vehicle's safety rating can be obtained from the Insurance Institute for Highway Safety. Depending on the company, insurance discounts could be available for safety devices on the vehicle, such as anti-theft devices or blind spot indicators.
Choosing New Or Used
The decision between choosing new or used will come down to many factors, including personal preference. But in any case, it is worthwhile to research all of the potential costs involved in purchasing and maintaining a vehicle. The professionals at J.P. Perry will help you review these options. Plus, since J.P. Perry is an Independent Agent, representing many of the nation's top insurance companies, our agents can shop for the best coverage at the best rates available.