Conventional wisdom is now leaning toward waiting to trade the family car for a year or two longer than has been the norm, or buying a certified used car to save on first year depreciation. More people are resigning themselves to spending money a little more cautiously until the future looks more positive. According to Newsweek, there is a current surge in the sale of certified used cars, up ten percent from last month.
Paying for That New Car Smell
When you first drive your new car off the showroom floor, the value of the car drops down to dealer cost less ten percent, meaning that suddenly, you owe more than the car is worth. Unless you have a Congressional entitlement to a large piece of the Stimulus Package, you probably have more practical uses your money. Not only that, your lender will insist that you purchase the more expensive comprehensive car insurance on the new car to cover his collateral.
Your Premium Will Vary.
Vehicles turning five years old are given a respectable drop in premium, as well again after ten years. Rates are assigned to a vehicle depending on its value, repair and replacement costs, security and performance. Maintaining the operating condition and safety features of the vehicle will help keep your rates low, your driving record clean, and the human cargo safe. If you add performance aftermarket parts, or any other amenities, they should be added to your policy since they increase the value of your vehicle.
Making Adjustments to Your Current Policy
With each year of use, a typical vehicle loses about ten percent of its value and should cost less to insure. To make sure your rate reflects the current age of the vehicle, be sure to examine your policy each time you renew. On older cars, you may not need comprehensive and collision, especially if the value of the car is at or below ten times the cost of the premium. To do the math, consult the Kelley Blue Book, or similar service for an estimate of the current value of your vehicle.
Value Appreciation
Some older vehicles actually become more expensive to insure due to their value to thieves and chop shops and the difficulty locating parts. For example, the 1995 Honda Civic continues to reign as the most popular stolen vehicle, followed by the 1991 Honda Accord and 1989 Toyota Camry. To keep your baby out of the hands of the bad guys, theft recovery tracking devices can be installed to allow law enforcement to retrieve your vehicle quickly. You will also be pleased to hear that some insurers offer a discount on your rates for installing them.
Coverage for an Older Car
No matter how old your car is, or how small its value, there are some types of insurance everyone should carry. Make sure you have medical payments covered, as well as uninsured/underinsured motorist coverage, personal injury, and liability coverage. Coverage for collision and comprehensive reimbursement may be reduced or eliminated if your vehicle has little value. In addition to obtaining adequate car insurance, you should make sure the vehicle has the complement of safety features to keep you and your family safe. Without airbags, your odds of surviving a crash without injury are lessened.
Improving the Safety of your Older Car
GM cars and trucks account for the greatest number of vehicles currently on the road without airbags, but can soon have a steering-wheel airbag system retro-fitted into older models at a cost of about $900. Insurance companies do not offer a discount for this add-on, but with the use of a lap belt and shoulder harness, it will provide improved protection. While saving money by keeping your older car is a worthwhile decision, taking steps to keep you and your family safe on the road is far more important.
