Buying a new car is a significant investment. Many people buy new cars to improve gas efficiency which can save money. However, one thing you should consider before purchasing a new car is how it will affect their car insurance. Let us look at some of the ways that buying a new car may affect car insurance and car insurance rates:
- Safety ratings - Car safety ratings have an impact on your insurance premium. Because safety standards are changing all the time, and insurance is based on risk, if a new car does not have a high safety rating the final premium may be higher.
- Theft statistics - Another consideration that may impact car insurance rates is theft rate. If the car happens to be one of the "top" stolen vehicles this could also result in the owner paying a higher insurance premium. This can of course be offset by having an anti-theft device.
- High end cars - Many who have purchased a luxury car because they feel they have earned it, are often surprised at the impact it has on their car insurance. Luxury cars typically have higher premiums than their less luxurious counterparts. After reviewing a few different vehicles, potential buyers may want to contact their insurance agent and find out what the premiums are for different makes and models.
- Anti-theft devices - Many new cars are equipped with an anti-theft device which can be helpful. The good news is that an anti-theft device will actually lower most car insurance premiums. Buyers should check with their insurance agent for anti-theft discounts that they may be eligible for.
- Credit rating - This is a little known fact, but even if a car owner's credit score is above average, it most likely will change when they purchase a new car. Remember, credit scores change when new debt is incurred. Final credit scores may also have an impact on car insurance premiums. Car buyer's can protect themselves from a spike in premiums if they understand what impact the debt incurred will have on their credit rating.
- Insurance deductibles - Chances are those who have just purchased a new car may consider a lower deductible than they had on their previous automobile insurance policy. This may also have an impact on car insurance rates simply because rates are higher if a lower deductible is selected.
Before purchasing a new car it is helpful to contact an insurance agent and find out how buying a new car may affect your car insurance. Since each state has their own guidelines regarding automobile insurance there is no one answer that is right for everyone. Be sure that the excitement of owning a new car is not going to result in a significant insurance burden that can cause later financial problems.
Image credit: By Bull-Doser (Own work.) [Public domain], via Wikimedia Commons