A big part of the cost of owning a car is car insurance. The high cost of insuring a vehicle is just one factor to consider when buying used cars over new models. So, are used cars cheaper to insure than new cars?
When it comes to auto insurance, age is a factor
It is not cheap to buy a new or used car. You must add up registration fees, taxes, monthly financing, fuel and maintenance. Factor in the cost of insurance and the investment increases even more.
According to Bankrate, “The average cost of insurance now averages $1,771 per year for full coverage or $148 per month. Minimum coverage insurance now averages $545 per year.
Several factors influence the cost of car insurance. An important point to consider is the age of the car.
“An older vehicle is usually cheaper to insure, mainly because older cars are less valuable, so an insurer won’t have to pay out as much in the event of a total loss,” says insurance expert Divya Sangameshwar. car insurance at ValuePenguin.
Car insurance companies do not consider whether a car is “new” or “used”. It’s more about the age of the car and the various conditions that come with aging.
If your car is financed or leased, like most younger cars, you will likely need to purchase comprehensive coverage. Full insurance is more expensive. Plus, you may not have to purchase comprehensive coverage or collision coverage on an older vehicle, which will lower your insurance bill.
On the other hand, younger cars are usually equipped with additional safety features. They can lower your insurance premiums because these features reduce your risk of a major accident. Also, younger cars have cheaper and more easily accessible parts, which makes the car cheaper to insure.
These 5 affordable new cars are cheap to insure
If you’re looking to buy a new model but are concerned about the cost of insurance, consider these five affordable and cheap cars to insure:
- 2022 Chevrolet Spark (MSRP: $13,600). The Chevy Spark is one of the cheapest new cars you can buy. At that price, you could add optional features.
- 2022 Toyota Prius Prime (MSRP: $28,220). The Prius Prime is a plug-in hybrid, which will benefit you when it comes to insurance.
- 2022 Kia Rio (MSRP: $16,250). If you like tech in your car, the affordable Rio comes with a surprising number of tech features, including an 8.0-inch touchscreen, Bluetooth, Android Auto and Apple CarPlay.
- 2022 Mitsubishi Mirage (MSRP: $14,645). You can get the Mirage in a sedan or hatchback body style. It also has advanced driver assistance systems such as forward collision warning, lane departure warning and automatic high beams.
- 2022 Honda Accord (MSRP: $26,120). The Accord is well known for its reliability and safety. And the 2022 model comes with the Honda Sensing suite of driver aids.
Your insurance premiums could increase for these reasons
Here are some reasons why your car insurance could increase:
The effect of inflation is noticeable in most sectors of our economy. The average increase is 7% and the cost of auto parts is closer to 10%. An increase in the cost of auto parts will make it more expensive for your insurance company to repair your car, which will increase your premiums. Supply chain issues and labor shortages drive repair costs up to 20%. That means it takes longer to fix your car, putting you in a rental longer and costing you more in premiums.
People are also driving more in 2022 than in the past two years. More people on the road lead to more wear and tear on cars and more car accidents. Unfortunately, these accidents turn out to be more serious and cause more deaths. In turn, these increased risks make your car insurance more expensive.
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