Used vs. New Car

When you buy a car, your insurance rates will largely depend a great deal on whether you buy a new car or a used car.

More expensive cars are obviously more expensive to insure because of their high cost of repairing or replacing them. This translates to an overall greater risk to the insurer. In addition, because banks and lien holders typically require you carry comprehensive and collision coverage, insurance premiums can be far higher if you need to finance a new car purchase.

Used cars, on the other hand, are usually much less to insure and usually don’t even require collision coverage. The only exception to this is if your used car is a classic, collectible, or antique vehicle.

As time goes by and you own your vehicle, it makes less sense to carry high costing insurance because cars depreciate greatly over time. Eventually insuring a vehicle can actually cost more than the car is worth and at that point you should really only consider carrying liability coverage and possibly Personal Injury Protection (PIP).