What Affects Your Premium On Used Car Insurance?
The cost of premiums on used car insurance is determined by a complex set of factors, which insurers use to determine how much of a risk you and your vehicle are to insure. Let’s take a closer look.
Considering insurance when buying a used car
It’s important to bear in mind that newer, more expensive cars are also expensive to insure. A second-hand car might not be brand new, but it’s still new to you. It’s always better to buy a car you can afford to insure properly.
Older cars, on the other hand, require more attention and maintenance than newer cars.
Depending on what you’ll be using the car for, how often you’ll be using it and so forth, you’ll have to weigh up which will work out more affordable. Perhaps in the long run, a newer car might prove the better option for you.
There’s another option, too. You may choose to get a new car and still keep your old car.
Dealers are, after all, notorious for low-balling the customer when it comes to trading in an older car as a down payment for a newer one. You may decide to use that old car as a back-up or hand it down to one of your children instead.
Luckily, there are many usage-based or low-mileage affordable insurance options for cars that are seldom driven.
New drivers who are planning on purchasing their first car might want to add the car to their parents’ existing policy. In such a case, you’ll have to report that information to the insurer within a certain time window.
What affects the cost of used car insurance
Let’s take a look at the factors that influence the cost of your used car insurance.
Value of the car
The more expensive the car, the higher the cost of insurance.
The cost of repairs
Older cars aren’t always cheaper to repair than new ones. The availability of car parts might be a problem. If your car is a rare model, or the manufacturer has limited representation in the country, or a particular level of skill is required to fix it – expect to pay. Uncommon = Expensive.
A high-performance vehicle inherently carries more risk. It’s driven faster, it’s driven harder and it’s built for power. From an insurer’s perspective, this increases risk.
Enhancements make your vehicle attractive. Not just to you, but to thieves too. A state-of-the-art sound system, fancy rims, etc. all factor into your risk factor.
Most cars from the last two decades have been fitted with anti-lock brakes. Newer cars may also feature parking assistance, driving assistance, drowsiness and lane departure alerts and so on. Having these safety features in place reduces the risk of accidents.
Older cars just don’t have these features.
On the flipside, once a newer car is out of warranty, those same safety systems can cost an arm and a leg to repair.
On lower-value cars, once the airbag has been deployed and needs replacing, an insurer might consider writing the car off, even if the actual damage was minor. This is because with such old cars, the cost of replacing the airbag may outweigh the value of the entire car.
How many accidents has this vehicle been involved in? An insurer will dig deep into the history of that car and model.
VW Beetle’s, for example, are prone to catching fire. Certain SUVs have a history of rolling. Uno’s crumple like soda cans in collisions. Certain models are even favoured by criminals.
Frequency of usage
How often will you be driving your car? How many kilometres will it cover per year? Will it be driven in rush-hour traffic or only over the weekends?
You, the driver
The demographics of the person operating the vehicle play a much bigger role in determining the cost of insurance than the vehicle itself. Key factors include:
- whether or not you live in a high-risk area
- your age; the younger the driver, the higher the risk
- your gender; men are more likely to crash their cars
- marital status; statistically, married couples and parents are more careful in their driving habits.
Insurers also look at your driving history and claims record. The more often you’ve claimed, the riskier you’re perceived.
Reducing the cost of used car insurance
Some of the factors that affect premiums for used car insurance are outside your control.
You can, however, be smart in your choice of vehicle, drive to the best of your ability, maintain your vehicle properly and keep a clean record.
Choose the right insurer and the right insurance product. These can go a long way toward saving you money.
Also, renegotiate the premiums for your car at least once a year. This is to ensure that reductions in the vehicle’s market value are reflected in what you pay for insurance.
What we offer at Pawn My Car
At Pawn My Car, we don’t offer car insurance or expert insurance advice. If you need funds, though, we offer competitive, asset-based loans against cars, including new and older models.
With Pawn My Car, you can use a car, bakkie, truck or boat that’s in your name to secure a loan quickly and easily, with no delays or laborious paperwork. For more information, contact us on 086 172 9648 or simply complete and submit our online application form.