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Discuss The Financial Aspects of Buying a Car in the Finance and Insurance forum at Car Dealer Forums; Cars are very expensive, not only is there the purchase price but you also have ...
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    Senior Member RatiRut's Avatar
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    Default The Financial Aspects of Buying a Car

    Cars are very expensive, not only is there the purchase price but you also have to keep in mind that there is the insurance fee, maintenance costs and most states have an annual registration tax, not to mention the gas prices. Yet most of us need a car for getting to and from word, for our groceries, taking the kids to basketball practice or ballet...When it's time to buy a new set of wheels, you should first consider what you really need before paying the dealer a visit. Find out if you really need that pickup or SUV which both cost a lot more in both purchase price and insurance than a regular family car. Do you really need all those fancy options which bloat the price? Also determine your budget clearly in advance and don't let the salesperson push you over that budget even the slightest.


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    Perhaps you have myriad good reasons for buying that a new car, especially if your reliable jalopy outlasted its usefulness. However, before you become caught up in visualizing your new ride, consider the significant impact your new car purchase will have on your car insurance. It does not just affect your premium but other aspects of your car insurance- like the types of coverage you buy and additional features you need, like new car insurance.
    When you purchase a new car, several factors that determine your car insurance premium - and the coverage you have - remain unchanged. These include your driving record, claims history and the minimum coverage required - factors that are independent of the vehicle you drive. However, your car insurance portfolio will be affected in the following ways when you buy a new car.
    1. If your new car is also a new model
    When your brand-new ride is also a new model, the insurer would likely base the auto insurance rate for the vehicle primarily on price. Other factors such as claims history and theft-risk, based on relevant statistics, usually affect the premium as well. However, a new model does not have such information available. Only after that model develops its own history would the insurer increase or reduce the insurance rate. If you aren't purchasing a new model, insurers use a combination of factors to determine the risk of insuring your new car. Read about which cars have a better impact on your car insurance by clicking here.
    2. Applicable discounts
    Insurers normally apply discounts to auto insurance policies based on anti-theft devices or safety features included. New cars normally have multiple safety and anti-theft features that redound to your benefit in many ways. Anti-lock brakes, parking sensors, air bags, electronic ignition and alarms are some of the features on your new car that can reduce the risk of insuring your vehicle. Once your new car has multiple safety and anti-theft features (or even recovery systems), you can access such discounts, which are 10%-20% on average.
    3. Innovative features on new vehicles
    New cars usually have new features that can increase the functionality and overall value of the vehicle. However, faster acceleration and the latest stereo system are some features that may boost your insurance rate - not just your car's value. New features that increase the likelihood of theft, accident or the potential claim amount will increase the insurance rate as well.
    4. Inherent features of the new car
    Insurers assess attributes of your new vehicle to determine the level of risk. The type of car, its size and color are just a few of the specific criteria that insurers check. They use these to place your car in a certain risk category. For example, sports cars exist in a higher risk category than station wagons, suggesting that a change in the type of car, or even your preferred color when you buy insurance, affects your premium.
    How buying a new car affects your car insurance is not only a matter of the insurance premium. You might have to modify or change your entire auto insurance portfolio because of your new acquisition. Knowledge of how your purchase affects your car insurance can even steer you towards making a prudent purchase in the first place.

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    Thanks for the information, it is really great for us as we can transfer the information related to buying car in cheap rates.

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