What costs less: insuring used cars or new cars?

While comprehensive and collision insurance generally costs less for a used car than a new vehicle due to its lower replacement value, you might come across some factors that may limit the savings. That's because insurers take many other variables into account when calculating your insurance premiums—from where you live and how long you've been driving, to the mileage and type of technology on your vehicle.

If you're trying to determine what would make the most sense for your budget, it's important not to just run the numbers on the insurance costs of a new vs a used car. You'll also want to weigh the overall pros and cons of each option. In some cases, a used car could end up costing you more in the long run.

Pros of purchasing a new car

Tempted to purchase a brand-new vehicle? In addition to getting lured by that new car smell, the visual appeal and the satisfaction of being the first to own it, other pros to consider of purchasing a new car may include:

• Greater reliability on the road
• Less maintenance and repairs required
• Access to the latest features and technologies to keep you and your passengers safe

Cons of purchasing a new car

While new cars are shiny, buying a new vehicle can be pricey. The purchase could put you at a financial disadvantage with your upfront costs as well as your insurance premiums. Consider these potential cons:

• Higher repair costs. Modern technologies in new vehicles drive up the costs of repair and replacement. As a result, your premiums can also increase to cover the difference, since your insurer may have to pay more to cover any claims you make.
• Faster rate of depreciation. While cars are generally seen as depreciating assets, a new vehicle can lose up to 60% of its value in its first five years alone, while costing more to purchase upfront than a used car.
• Easier and more appealing to steal. Keyless fobs and other technologies can make new cars not only easier to steal but also more attractive targets for thieves. These higher risks of theft are factored into the cost of your insurance premiums.
• May require paying for additional comprehensive and collision coverage. If you're taking out a car loan, some lenders may require you to get comprehensive and collision insurance, which will make your premium payments even higher. These types of insurance, which are often selected by insureds even without a lender, cover damages to your car, whether caused by vandalism, theft, weather events or accidents with other vehicles.

Pros of purchasing a used car

If you're less swayed by the bells and whistles of a new car, then buying a used vehicle may seem like a more cost-effective option, especially if you're on a strict budget. That's because of the following advantages:

• Less insurance coverage required. Dropping the comprehensive and collision coverage will mean paying less for your insurance each month, though it does leave you on the hook for replacement and repair expenses.
• Warranties may be available. If you purchase a certified pre-owned vehicle, you may be able to benefit from the remaining period of the manufacturer's warranty, which can help you save money on repairs. Some states offer used-car warranties even if you purchase your vehicle from a dealer or private seller.

Cons of purchasing a used car

• Insurers may see it as more likely to break down. Even though it may be cheaper to fix than a brand-new car, insurers will may use the likelihood of a break-down to calculate your premiums accordingly.
• Less fuel economy. Older cars tend not to be as fuel efficient than newer cars and can lead to higher gas costs.
• Expensive repairs. If your vehicle is past its warranty expiration date, you will be paying more for repairs.

Other variables driving insurance rates

Sometimes buying a used car won't save you much in insurance costs compared to a brand new vehicle if the following variables apply:

• Where you live: If your zip code is in a dense, highly populated urban city you'd be considered to be at higher risk of accidents than if you lived in a rural area.
• Age and experience level of the driver: The fewer years the driver has been on the road, the more likely they are to get into an accident, which insurance companies will factor into their premium costs.
• Driving record: Previous driving accidents, safety violations and speeding tickets, as well as your record of claims can all bump up your insurance bill since you'd be seen as a higher risk driver.
• Model of the car:Certain vehicle makes and models are stolen more regularly than others and a higher risk of theft means a higher chance you'll be submitting a claim. Other factors your insurer might consider include the model's performance on safety tests and cost of repairs.
• Mileage: If you spend a lot of time commuting for work, you could be seen as higher risk of getting into an accident than if you just take your car out for a spin on the weekend. Conversely, if you buy a car with fewer miles that hasn't been driven regularly, that could adversely affect your tires and increase your likelihood of accidents, too.

Do I need insurance before I buy a used car?

If you're wondering, "do I need insurance before I buy a used car?" The answer is definitely yes—or else you won't be allowed to drive it home with you. Check to see if your current insurer has a grace period in which you can add your newest purchase to your policy. Otherwise it's always a good idea to get quotes as soon as you've narrowed down your vehicle options but before you actually buy your car, to make sure you can afford the monthly premiums.

While used cars usually come with lower sticker prices and less requirements, they might not always be cheaper to insure than a brand new vehicle. We know there's a lot to think about when insuring a used car, but don't worry—we're here to help you make the best decision for you. Connect with a Westfield agent anytime for further advice and guidance.