Money doesn’t grow on trees, but owning a car can burn your metaphorical money tree down fast. That was a hard lesson that I had to learn as a youth. I had this dream of driving my brand new Porsche down the streets of Dallas. Where I would obtain the money for the Porsche or how I would afford the car insurance never occurred to me. Such small issues where beyond my concern.
Then I turned 16, got a part-time job at a local fast food joint, and started to look into how much my car would cost me each month. One thing led to another and before I know it I was consulting with one of the Dallas insurance agents in the area. And I realized something: insurance was expensive, but there were ways that I could decrease my car insurance rates.
Lesson 1: Forget the Porsche
As much as my young heart yearned for a Porsche, the car was out of my price range. Even if I had enough to purchase a Porsche, I would have had a hard time keeping up with the monthly car insurance payments. Car insurance premiums are based on the age and the brand of vehicle that you are looking to insure. The higher the market value of the car, the higher the insurance premium will be.
Age. Generally, the older the car, the lower the car insurance premium will be. This has to do with the fact that newer cars tend to be more expensive to repair. Some older cars can break this rule because the parts are incredibly rare. Due to this fact you should always check how much your car would cost to repair before committing to the purchase. Some older cars require rare parts that could push your repair and insurance costs up.
Vehicle Brand. Cars are classified as specialty/sports cars and regular vehicle. Specialty cars like the Porsche or Jaguar are more expensive to insure than your typical Buick because they are more expensive to repair. If you are trying to decrease your car insurance, a sports car is not the way to go.
Lesson 2: Limit Driving Time
You can reduce your insurance premium by decreasing your driving time. Some insurance companies have started basing their customers’ insurance premiums on their driving behavior. In Usage-Based insurance premiums monthly premiums are calculated based on miles driven, the time of day that you drive, the area that you drive. Usage-Based insurance premiums are measured with odometer readings or an in-vehicle telecommunication device. If you are an experienced and safe driver who only drives their car short distances, you can benefit from lower premiums with Usage-Based insurance.
Lesson 3: Discounts
Many insurance agencies offer discounts to drivers who qualify as a means of attracting new customers. You should always look at the discounts offered by your insurance company when considering ways to decrease your insurance. Here are a few common discounts offered by insurance companies.
- Good Student Discount. You might qualify for the good student discount if you are 16 to 14 years old, currently attending high school or college, and have a GPA that is at least a B. The GPA and age requirements will differ based on your insurance provider. If you do qualify for this discount, you are looking at up to a 15% deduction in your monthly premium.
- Defensive Driving Discount. You might qualify for the defensive driving discount, if you attend a state certified defensive driving class. Depending on your insurance provider this discount may only be offered to individuals who are over 55 years old. If you meet both the age and class prerequisites, you can receive up to a 10% insurance deduction.
A car can be murder on your finances. Whether you are a 16-year-old first time driver or a 55-year-old seasoned driver, you can take measures to decrease your auto insurance. Driving the right car, qualifying for deductions, and cutting your driving time, you can decrease the amount of money you spend each month on car insurance.
Allen Grove is a car fanatic who has been cruising the streets of Dallas in his car since he was 16. He uses his writing to offer useful financial tips for his fellow car drivers.