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Before Buying and Insuring a Used Car, Make Sure You Follow These Tips

In the market for a used car? You're not alone.

Prices of secondhand automobiles rose 10.5 percent in June, according to the Labor Department, and have soared 45.2 percent over the past year as supply issues with parts continue to slow the production of new cars.

Buying a used car is often a sensible option, but there's a lot to keep in mind when doing so. Here's what you need to know if you're preparing to buy and insure a used car.

Older cars are usually—but not always—cheaper to insure

The rates for comprehensive or collision coverage on an older car are usually lower than what you'd pay for a newer car. But what you pay for insurance also depends on other factors, such as the type of car, where you live and your driving record. Living in a high-premium state, such as California, could make a big difference in cost, according to the National Foundation for Credit Counseling (NFCC). And if you're buying a used car for your child who's a new driver, you still might find yourself paying higher insurance rates because age is one of the primary factors that insurance companies consider. (Fewer years behind the wheel means teenage drivers are more likely to get into an accident and submit a claim for reimbursement.)

In general, however, used cars are usually less expensive from an insurance perspective. Newer cars are more expensive to repair because they have new technology, which increases how much insurers will have to pay to cover claims, according to the NFCC.

Comprehensive and collision coverages are good to have

Remember—if you're driving a used car and you drop collision coverage, your policy won't pay for the damage if your car is ruined in an accident. And, if your used car is stolen, and you don't have comprehensive insurance, you're out of luck, too. That's something to consider, depending on the value of your car. No matter what, you still need liability insurance, which is required by law.

Look up the VIN before buying

A car's­ Vehicle Identification Number, or VIN, can reveal a lot about the history of a used car and provide information on prior accidents and whether there have been any recalls on the vehicle due to safety issues. Here's why that's important: If the car malfunctioned while you were driving it and caused you to have an accident, you would probably see your auto insurance rates rise.

Auto insurers also use a VIN to gain information about a car's features. Some of them—like anti-theft devices—just might save you money because they minimize the risk of theft.

Another bonus: checking the VIN can certify the used car isn't stolen, according to the Insurance Information Institute. And if you provide a VIN when researching auto insurance policies, you can get a more accurate quote. Head online to try a VIN decoder from the National Highway Traffic Safety Administration.

Take the car for a test drive

Taking a used car out for a spin or even to your mechanic for a quick checkup is essential to determine the vehicle's condition. A few pointers:

  • Ensure the headlights and brake lights work since you'll probably be testing the car during the daytime.
  • Drive the car on different types of roads and at different speeds.
  • Ensure the speedometer works; if you're caught going over the speed limit—even accidentally—you'll probably see your auto insurance rates rise.
  • Note any unusual sounds, especially when you apply the brakes.

Remember, anything that could go wrong with the car and cause an accident could make your auto insurance rates rise.

Check the mileage

Everyone wants a car with low mileage. A good rule of thumb from Tom Kadlec, an auto expert based in Minnesota, is to assume the average car owner puts 12,000 miles on a car annually, then multiply 12,000 by the car's age. So, for a 7-year-old car, a reasonable amount of mileage would be 84,000 miles.

Remember, though, that low mileage doesn't always equal a good deal. Having fewer miles on the vehicle might indicate the car hasn't been driven regularly. Here's why that's important: When your car sits for long, flat spots can start to form in the tires and make you more likely to have an accident when you finally do take it out for a drive.

The good news is that if you don't have a long commute to work, you're likely to pay less for insurance, as most insurers assume the more you're on the road, the greater your chances of being in an accident. By reducing your mileage, you can reduce your rates.

We know there's a lot to think about when insuring a used car, but don't worry—we're here to help. Connect with a Westfield agent anytime to get advice and guidance.