Are New or Used Cars Cheaper to Insure?

by Quiana Darden Updated October 5th, 2021

When you’re looking to save on car insurance, the type of vehicle you drive can significantly impact your overall costs. One common question we receive is whether new vs. used car insurance is cheaper, and that’s what we’re going to explore today. Based on the information below, you might opt for a different vehicle than you currently have or plan to purchase to save money. 

Are Used or New Cars Cheaper to Insure?

When deciding on buying a new or used car, most drivers are focused solely on the price tag and forget about additional costs like insurance. Getting car insurance is an essential part of purchasing a new car, so it’s not a cost you should take lightly. You’ll need to do some research to find the right insurance for your vehicle, whether it’s new or used. 

On average, this is how much it costs to insure a vehicle ranging from model year 2012 to 2022.  

2022 – $208/mo

2021 – $188/mo

2020 – $179/mo

2019 – $169/mo

2018 – $168/mo

2017 – $166/mo

2016 – $161/mo

2015 – $157/mo

2014 – $154/mo

2013 – $150/mo

2012 – $149/mo

As you can see, it’s typical for car insurance costs to decrease as the vehicle gets older. So while a 2022 vehicle costs $208 a month on average to insure, a car from 2012 would only cost you an average of $149. That’s a difference of $59 a month or $708 a year! 

Of course, everyone loves saving money. But is buying a used vehicle right for you? To help make your decision easier, let’s take a closer look at new vs. used car insurance to decide which is best for your lifestyle and budget.

What’s Different When Getting New vs. Used Car Insurance?

Insurance costs vary a lot, so when looking at car insurance for new vs. used vehicles, there’s no one size fits all way to tell what’s going to be different between the two. The primary difference is you’ll typically find insurance costs more with new vehicles than older vehicles. 

Though you have to keep in mind things like safety features, whether it’s a luxury vehicle or not, and your driving record will also impact insurance costs for a new or used car. 

Vehicles often require different levels of coverage, and the cost to insure them depends on if you purchased your car by using a loan or lease. 

Coverage Level

One factor to consider when getting car insurance is the coverage level you need. It’s generally recommended or even required that you get insurance coverage beyond state minimums when you have a loan on your vehicle or are leasing. The same can be said for used cars that have a loan. 

When purchasing car insurance for a new car, most drivers will either choose or be required to buy these coverages:

  1. Comprehensive coverage: Comprehensive coverage protects your vehicle if it is damaged due to external incidents such as a fire or hurricane. 
  2. Collision coverage: Collision coverage pays for damage to your car from a collision with another vehicle or object, like a fire hydrant. 
  3. Gap insurance: For drivers who have taken out a loan to finance their brand new shiny vehicle, gap insurance is one way to protect their investment. Typically purchased within 30 days of buying your new vehicle, gap insurance will cover the difference between what you owe on your car and its value if it’s stolen or totaled.
  4. Loan/lease payoff: Loan/lease payoff covers about 25% of the actual cash value of your vehicle. This insurance works to pay off the amount you owe on a totaled or stolen vehicle loan after your insurance company pays you. 

Why Insuring a Used Car Isn’t Always Cheaper

Although the average used car insurance rates remain steady, this doesn’t apply to the outliers. While ensuring a used car tends to be cheaper, this isn’t always the case. For example, owners of luxury, specialty or classic cars often pay the same or more than drivers of new vehicles due to the cost of parts, repair or the overall value. In addition, an older used car with a higher value will cost more to insure than a newer car with a lesser value.

Factors that Impact Car Insurance Costs

Both vehicle-related and non-vehicle-related factors can impact the cost of car insurance for new and used vehicles. Here are some factors to consider.

Vehicle-Related Factors That Impact Car Insurance Costs

  • Value: The value of your car is more important than its age. If your vehicle was made in 2016 but held its value, you’ll be looking at a higher premium. Why? If your car has to be replaced after a collision, your insurance company considers how much it’ll cost them. That’s why a higher value equals a higher premium. 
  • Repair costs: Insurers also look at the expense of repairs to your vehicle. If your car is used, but with newer, expensive technology, it’ll cost much more to repair than an older car with limited tech features. Similarly, a luxury vehicle with parts that are hard to find or expensive to purchase will cost more in repairs than an affordable vehicle with easily ordered parts. At the end of the day, the more your insurance company has to pay in repairs, the more you’ll likely pay in premiums. 
  • Claims history: What does your car’s claim history look like? Have many people filed claims for your car model in the past? This information is taken into consideration when calculating your monthly insurance rates. Additionally, if your car model is stolen regularly, you’ll pay more for insurance than another model at a similar price point.
  • Insurance coverage: How much insurance coverage do you plan to buy? Will you opt for the state’s minimum coverage, or will you choose to add on comprehensive, collision, or gap insurance? The amount of coverage you select directly affects the cost of your monthly premiums. 

When purchasing a new vehicle, it’s essential to remember insurance companies aren’t only paying attention to the type of car you’ll be driving. They also examine you as the driver. 

Non-Vehicle Related Factors That Impact Car Insurance Costs 

  • Driving record: Insurance companies will look at your past driving record to understand your potential future driving habits. If you tend to get tickets often or have a DUI on your record, you will see an increase in your rates.
  • Age: Younger drivers are often viewed as higher-risk drivers and will pay more for insurance. However, car insurance starts to lower in price once a driver reaches the age of 25. 
  • Credit score: Your credit score is a significant factor in calculating your insurance rates. Many studies reveal drivers with lower credit scores tend to file more claims than drivers with higher credit scores.
  • Driving experience: How many years of driving experience do you currently have? The more time you have behind the wheel, the less likely you will make costly mistakes or be involved in a collision. The longer you go without claims in your driving career, the less risky insurance companies view you.
  • Annual Mileage: Is your annual mileage on the higher side? How much you drive can have a massive impact on your insurance rates because the more you’re on the road the more likely you are to be involved in an accident.
  • Previous insurance coverage: If you’re not a brand new driver, having a lapse in car insurance on your record will negatively impact you. To the insurance company, this means you might have been driving while uninsured, which means you could be a risky driver. 

How to Get Car Insurance for a Used Vehicle

Getting car insurance for a used vehicle is similar to the process of getting car insurance for a new car. You can expect the process will likely look something like this:

  1. Contact your insurance provider online or over the phone. If you don’t yet have an insurance provider or want to compare costs before selecting a company, go to Compare.com to quickly and easily compare rates and ensure you’re getting the best deal. 
  2. Once you choose an insurance company, let them know you plan to purchase a used vehicle. 
  3. Give them the vehicle identification number (VIN) to receive a personalized auto insurance quote.
  4. Make sure to obtain confirmation of your coverage when it begins.

When you set up car insurance on your used vehicle using this method, you need to ensure you definitely want the car you plan to purchase. We recommend finishing negotiations with the dealership or previous owner before finalizing your new auto insurance policy to avoid any mishaps. 

Should You Get Car Insurance Before Buying a Used Car?

All drivers need car insurance that meets their state’s minimum requirements before getting behind the wheel. With this in mind, It’s never a bad idea to shop around and get insurance quotes before making a final decision on a car. 

Imagine how disappointed you’ll be after purchasing your used car, only to find you can’t afford to make the monthly car insurance and car payments. Shopping around for car insurance will ensure you know what you’re getting into before buying your used vehicle. 

Search online and compare rates using Compare.com. If you’re sure about the car you plan to purchase, you can get more personalized information on coverage by providing your insurance provider with the car’s vehicle identification number (VIN.) By viewing dozens of competitive rates from insurance companies in your area, you can get the most affordable coverage.

What Are the Best Used Car Buying Tips?

Need help buying your used car? Here are a few tips to implement during your buying process for a smooth purchase:

  • Create a list of used cars you like: Before you start pounding the pavement, looking at vehicles in person, create a list of used cars you like to start narrowing down your choices. 
  • Check the vehicle history report: Look up the vehicle’s identification number (VIN) before buying. You’ll get invaluable information about the vehicle’s history, including accidents, repairs, and maintenance. 
  • Test drive your car: Take the car out for a spin. It might even be a good idea to bring your mechanic along to take a look at it.
  • Research possible insurance costs: Do your research and see how much your used car of choice will cost to insure.

What Are the Best New Car Buying Tips?

It’s all too easy to get ahead of yourself when buying a new car. To avoid overpaying for a new vehicle or getting overwhelmed by the process, we’ve put together a few tips to follow:

  • Get preapproved for a loan: Before you set foot in the dealership, get preapproved for a loan through your bank or a credit union. Doing so will help you negotiate a better rate with the dealership.
  • Do your homework: See how much people are paying for your new car and use this number to haggle the price down at the dealership. 
  • Consider the time of year: Consider the time of year before buying a car. Try to purchase your vehicle around holidays or significant sales events held by the dealership to get the best discounts. 

How to Find the Right Car Insurance

To find the right car insurance for you, you’ll need to consider your needs. Once you’ve met the coverage requirements for your state, all the other factors are dependent upon you and your car. 

One way to compare car insurance rates in a timely and organized fashion is to use Compare.com. Once you enter your zip code, Compare.com gives you multiple auto insurance rates to compare side by side. Since you can see all your options at one glance, it’s much easier to select the policy that fits you the best. 

New vs. Used Car Insurance FAQs

Is it cheaper to insure a new or used car?

Put simply; it’s often cheaper to insure a used car for the following reasons:

  • Used cars are more affordable to repair 
  • You won’t have to pay for additional coverage (such as comprehensive, collision, and gap insurance)
  • The overall value of the car has decreased over the years 

But, keep in mind this isn’t always the case since various factors are at play when determining car insurance rates.

Is insurance higher for used cars?

Used cars are generally cheaper to insure than newer cars, but this isn’t always the case. For example, if your vehicle is used and up in age, but it happens to be a luxury, classic, or specialty care, you’ll find yourself paying higher insurance premiums.

Is it better to buy a used or new car?

There’s no one answer to this question. It’s best to buy the car that you like and can afford. When considering affordability, consider the actual cost of the vehicle along with insurance, maintenance, gas, and other factors. 

Compare Car Insurance Quotes