Many people ask this same very good question. Are new or pre-owned vehicles cheaper to insure? Well, this question is not easy to answer quickly. It is a little like asking if blue or brown houses cost more. The cost of the house is not based on the paint, and so the cost of coverage is not totally based on the age of the auto.
Some used vehicles may be very expensive to insure. They may be luxury models, classic cars, or custom hot rods. But on the whole, if you are comparing similar types of vehicles, you can find some ways to save money with an older and less valuable car.
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.
Now you must consider the decision to pass on full auto coverage because it means you assume more risk. But it can save you a lot of money every month, especially if you are covering a higher risk driver. So it is up to you, and your insurance agent, to balance the cost vs. the risk.
GAP insurance is a product that covers the difference between a loan amount and the actual book value of a vehicle. If you do not have a loan, there will be no reason to spend extra money on this coverage. So you can save money this way if you can buy an older car you can pay cash for.
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