Used Car Prices Drop 11.2% Here’s How Buying One Can Affect Your Auto Insurance Rates

key points

• The less expensive it is to repair or replace your car, the less expensive your auto insurance will be.
• A user car can also lead to lower car payments.
• Consider your budget and how often you drive to decide whether a new or used car is right for you.

For some people, there’s nothing quite like the feeling of driving a new car. And to be fair, this tin be a good thing to have a new car in perfect condition.

The problem? A new car is likely to cost you. In March, new car prices rose 6.1% annually, according to the consumer price index for that month. The prices of used cars, meanwhile, fell by 11.2%.

Generally speaking, buying a used car means spending less money on a vehicle and taking on smaller auto loan payments. But these days, you might save especially on the latter by going with a used vehicle. Loan rates have risen following a series of interest rate hikes by the Federal Reserve. So the less money you have to borrow to buy a car, the better.

But aside from auto loan payments, there’s another good reason to buy a used car instead of a new one, and that’s that you can save a good amount of money on auto insurance.

A less expensive car could mean less expensive insurance

One myth you’ll often hear about car insurance is that it costs more to insure a used car. The logic is that there are more unknowns with a used car, so your auto insurance company takes on more risk by writing a policy for one.

But actually, the reason you can pay less for auto insurance with a used car, no more, is that used cars, by nature, are less expensive. When your auto insurance company sets premium rates, it considers how much money you might need to pay in the event of an accident or damage to your car. And the less your car is worth, the less you’ll have to pay to fix or replace it.

Remember that part of the reason new cars cost more money than used cars is that they are loaded with newer parts that are more expensive to purchase. So, if you are willing to drive a used car, you can save yourself a lot of money.

How to decide which car to buy

There are different factors that should go into your car buying decision, such as how much space you need and how important it is to get good gas mileage. You should also consider your budget and how much you expect to use your car.

If you don’t drive much, it’s easier to argue for a used car, because why pay for a vehicle that can only leave the garage once or twice a week? Likewise, if you’re not sure whether you want a larger or smaller vehicle and therefore arrive at the model you get, you can also buy a used car, drive it for a year and see how it works for you. .

It’s also a good idea to buy a used car if you’re buying your first vehicle and aren’t sure which features are most important to you. Also, paying off a car can take some getting used to. So if you can reduce your costs while still adjusting to that expense, that’s a good thing.

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