1. Consider the Cost of Insurance Before You Buy
When you shop for a car, you probably don’t think about the cost of insuring it until after you’ve driven off the lot. But the best time to consider the cost of auto insurance is before you head to the dealership, said Neil Richardson, a licensed insurance agent and product manager with The Zebra, an auto insurance comparison website. You need to pay extra attention when you’re buying car insurance for the first time.
“Insurance is a major factor in the total cost of ownership of a vehicle,” he said. According to The Zebra’s annual report on auto insurance, the average American pays $1,427 each year.
The most expensive car to insure is a Mercedes-Benz E Class CLS-Class at an average annual premium of $3,541 per year. The least expensive vehicle to insure is a Honda CR-V, at an average premium of $1,317 per year.
The difference between insuring those two cars is more than $2,000. That’s the cost of a relaxing getaway.
2. Your Credit Score Can Save — or Cost — You More
Maintaining a good credit score can pay off in big ways, including lower rates on your mortgage, credit cards and auto insurance. It’s worth it to improve your score, too.
“Credit plays a huge factor when it comes to car insurance,” Richardson said. That’s because people who are responsible with their finances are viewed as more likely to be careful behind the wheel.
The Zebra’s State of Auto Insurance Report shows the serious impact credit has on car insurance rates, Richardson said. Improving your credit from “poor” to “excellent” could lower your premium 44 percent.
Related: What Is a Good Credit Score, Anyway?
3. Teenagers Cost More Than You Think
If you have teens, you know they are expensive. That’s true whether you’re talking sky-high cellphone bills, designer clothes or auto insurance. If your teen is about to start driving, get ready for sticker shock.
Compared to other age groups, teens pay more than double for auto insurance, The Zebra report found. Although the national average annual rate for drivers ages 50-59 was $1,258, the national average for teens 16-19 was — you might want to sit down — $5,151.
Major reasons why teens pay more is because the age group has a higher rate of tickets and accidents, compared to other age groups, according to the report. The good news is that rates drop quickly when drivers are in their 20s and are half as expensive for a 29-year-old compared to a 20-year-old.
4. Your Neighbor’s Insurer Might Not Be Good for You
Your next-door neighbor just got a smokin’ good rate for his car insurance, so you figure that’s the best insurer for you, right? Wrong. In fact, you need to shop insurance companies if you want the cheapest insurance, Richardson said.
“Each company has a different target market based on age, credit, homeownership status and more,” Richardson said. “So the company that can offer you the best rate may not necessarily be able to offer your neighbor the most competitive rate.”