I grew up with a dad who worked in the insurance business and who never bought a brand-new vehicle, so I have pretty strongly ingrained views on the new versus used car debate.

However, there are advantages (and disadvantages) on both sides of the equation.

Insuring your new car

When you buy a new car, you benefit because you can custom order exactly what you want, you’ll have less maintenance to do at the beginning, and you’ll start out with warranty coverage. Insurance companies understand these benefits, and some will provide you with a discount for owning a new vehicle. If you are buying a new car, you should check with your agent to see if you can save anywhere from 10 percent to 15 percent.

On the other hand, consumers sometimes overlook the cost of insurance completely when shopping for a new car and may experience delayed sticker shock when they see their new insurance bill. New vehicles are also susceptible to theft. This, along with multiple factors such as who is driving the vehicle and where the vehicle is garaged, is considered when determining insurance costs.

Insuring your used car

Buying a used car has its own set of benefits, including (in most cases) a lower purchase price. There are benefits in terms of your auto insurance as well. In the event of physical damage, the cost to repair a brand new vehicle or pay you for the total loss of a damaged vehicle is a lot more costly to the insurance company than to replace a used car.

If you have purchased a used car, inquire with your agent or carrier about the possibility of adding replacement cost coverage to your policy. If your vehicle is totaled in a collision, this coverage will provide you with a brand new car (or the cash equivalent) equal to the loss of your used car, preventing you from losing money as a result of depreciation.

Work with your insurance agent

In the end, you need to review your budget before making any car purchase and then discuss that purchase with your agent. He or she can help you figure out which insurance plan is the best for your car, whether you bought it new or used.

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Linda Rey is a licensed insurance agent at Rey Insurance with a broad spectrum of expertise in life, accident, health, property and casualty insurance as well as retirement planning and college funding strategies.

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