My Personal Finance Blog

If compare secondhand and new cars, indisputably it is a sensational fact to drive off in a brand new car, instead of a used car. But when it comes to monetary thoughts, most people would often end up buying secondhand cars due to financial constraints. Of course, at such times, secondhand cars generally have considerably higher value than a new one. You should possibly get prepared to lose exorbitantly when you intend to sell off your new car in the future.   At a general view new and secondhand cars are still in high demand, depending on the buyer’s personal preference and budget. An average rate of depreciation is approximately 35 to 40 percent within three years. From a survey done among the fabric of society, 40 percent is considered a steep losing price to pay for; giving rooms of the factory’s warranty period, the new smell and the days you spent driving on the road. The figure may vary if there are accidents or other repairs and defects.   Basically, to compare secondhand and new cars, the first owner is the one at the highest stake because usually they undergo highest reduction value. Aside from that, most secondhand cars buyers benefited from the lower registration costs, lower insurance premiums, lower taxes costs, and lower licensing costs, although not necessarily higher loan value. But of course, a lower purchasing cost simply indicates lower financial costs and less interest to pay for, despite not being able to apply loans perhaps up to 90 percent of the price value.  

Nevertheless, inasmuch as the price of secondhand cars tempt people into buying it, those who give priorities into new safety improvements, enhanced performances and latest automobile features may still invest into new models. For this, new and secondhand cars may disclose distinctive differences as secondhand cars are deemed to be obsolete. Yes, secondhand cars buyers can still install whatever new features present in the new car models but they are subjected to increased costs, in additional to the installment fee.

Doesn’t it feel sometimes that when it comes to auto insurance it’s like playing the game no one tells you how to play it right and where the rules are written without your consent? Well, to ease the situation, here are some auto insurance rules most insurance companies won’t tell you about.

1. If your credit rating is good you will have better rates.

Most of the insurance providers, whether big or small, use credit information to determine the rates you will be charged with. That’s because numerous studies have shown that there’s a direct link between a person’s credit rating and the probability that the very same person would file an insurance claim. Those who have poor credit scores tend to file claims more often than drivers with good credit reports. And we know how insurance companies don’t like insurance claims.

Tip: If your credit report is not that good, don’t haste with buying auto insurance. First, make sure you have settled all your debts and closed unused credit lines. After doing this wait for a month and your rates will be much lower than you would expect.

2. The model of your car affects your premiums.

Insurance companies don’t disclose the exact methods they use to calculate their rates, but your car make and model certainly plays an important part in the equation. All insurance providers have charts on all car models and their respective insurance cost based on theft rates, repair costs and overall safety.

Tip: Try purchasing a car with reasonable repair costs, good safety scores and low theft rates in your area in the first place. This will always give you the chance of having cheap car insurance.

3. Bad driving means higher rates.

Most insurance companies will raise your rates up to 40% of the initial premium you’ve paid if you have a single at fault accident. However, not all companies follow this rule.

Tip: There are insurance providers that have higher tolerance for first-time accident drivers. So when you purchase your cheap auto insurance policy or ask the provider if they have such incentives and what are their rules.

4. If your friend borrows your car and ends up in an accident you will still have to pay higher premiums.

It doesn’t matter who was driving the car if it was with your own consent. It will be you who will file the claim and this will eventually lead to increase in your premiums.

Tip: In case you didn’t give consent on using your vehicle your friend will be liable for the accident. However, if he or she doesn’t have own insurance or the damage resulted exceeds the amount of coverage contained with his or her policy the other party may come to you in order to settle additional medical and repair costs.

5. Official cancellation is required when switching providers.

You are free to cancel your policy any time you feel the need to. All that is required is to inform your current provider in written form.

Tip: After you have searched for cheap auto insurance and chosen another provider you can simply contact your insurance agent and inform him that you want to cancel your current policy from a certain day. In most cases the company will send you a filled out form where only your signature will be required.