Is It Cheaper to Insure a New Car or a Used Car? A First-Hand Look
Congratulations! The time has come to buy a new car. As you prepare for new car ownership, you will have many vital decisions to make as you select from different models, trim levels, body styles, and, most importantly, conditions. This begs the question, will you purchase a new or used car? Twin State Ford welcomes you to our family-owned and operated Ford dealer in St. Johnsbury, VT, serving you with bestselling new and used cars for sale to fuel your upcoming adventures. Insurance coverage varies by the vehicle’s age, condition, location, and coverage requirements. All of these factors can influence the cost of your vehicle insurance, specifically whether your car is new or pre-owned. Follow along with our experts as we dive into some of your most frequently asked questions, including whether it is cheaper to insure a new car or a used car. Discover which is better for your lifestyle and budget, and visit Twin State Ford to take a test drive of a new or used Ford model for sale in St. Johnsbury, VT.
Factors Affecting Car Insurance Costs
Several factors affect the cost of insuring a vehicle. In addition to whether your car is new or used, other considerations such as your credit score, marital status, age, driving record, and claims history are all taken into account. These factors influence car insurance premiums, which can vary significantly. A good driving record can lead to lower car insurance premiums, especially when combined with other favorable factors. If you’re wondering whether insurance is cheaper for new cars, the answer is typically no. However, it’s not that simple. Stay tuned to see which factors can affect whether it is cheaper to insure a new car or a used car and what you can do to save the most money possible on auto insurance in Vermont.
Depreciation and Replacement Value
New cars are more expensive and valuable, which affects the costs of insurance premiums. New vehicles from the dealership typically depreciate quickly, losing up to 20% of their value immediately after purchase and within the first year. The depreciation of new cars can create a gap between the car’s value and what you owe on the loan. This is where gap insurance becomes crucial, especially if you have an auto loan, as it covers the difference between the insurance payment and the remaining amount owed on the loan in case the car is totaled or stolen. Used cars depreciate slower than newer vehicles because they have already experienced immediate depreciation within the first year. For this reason, a new and a used vehicle around the same age and condition could have two very different costs because the used car has already depreciated. Buying a used vehicle could reduce the upfront cost of the car and the cost of insurance since the cost of insurance is based on the vehicle’s cost value. However, it’s essential to remember that used cars typically have more repair costs, affecting its overall value and insurance cost.
Advanced Technology and Repair Costs
New cars have complex electronics and technology, which can increase their value and, therefore, insurance costs. Advanced sensors, cameras, and touchscreens can be expensive to replace and repair. For example, cars known for their advanced technology can have higher insurance costs. Insurers account for these expenses when calculating premiums for new cars.
Theft and Vandalism Risks
Due to their desirability and higher resale value, new cars can attract more attention from thieves. The increased risk of theft and vandalism contributes to higher insurance costs. Full coverage insurance is often recommended for new cars with higher theft and vandalism risks. To reduce these risks, consider a new vehicle with anti-theft features.
Insurance Cost for New Cars vs. Used Cars
New vs. used car insurance costs generally show that insurance for a used car is often less expensive than insurance for a new model. Car insurance costs generally decrease as a vehicle’s value goes down, making used car insurance more affordable over time. However, insurance companies offer the same coverage types for both new and used cars.
New Car Insurance Considerations
Insurance premiums for new cars can be higher because of their value and the car’s risk of being stolen. According to an annual report released by the National Insurance Crime Bureau on the 10 most stolen cars in the US, cars more likely to be stolen may cost more to insure. Other factors affecting insurance costs for new cars include parking location, residence location, and the vehicle’s safety record and features. Specific safety features, however, like anti-theft devices or blind spot indicators, may qualify for discounts. Nearly all insurance providers offer discounts, including anti-theft, airbags, and anti-lock brakes. Full coverage car insurance, which includes liability insurance, collision coverage, and comprehensive coverage, is often recommended for new cars.
Used Car Insurance Benefits
Used cars are less likely to be stolen or vandalized, which can lead to lower insurance costs. Insurance companies consider the lower risk of theft and vandalism when determining premiums.
Which Is Right for You?
In many cases, the benefits of insuring a used car outweigh the costs of insuring a new car. However, that isn’t always the case. To determine which is right for you, consider your budget, lifestyle, preferences, and creditworthiness. Additionally, consider the maintenance costs associated with owning a car, as they can significantly affect the overall cost. To learn more, visit Twin State Ford to find your next new Ford for sale in St. Johnsbury, VT.
