What Are the Key Factors that Affect Car Insurance Rates if You’re Under 25?
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Drivers under the age of 25 are far more likely to be involved in a traffic collision than drivers who are over 25 years old. Of course, insurance companies charge higher premiums for 16- to 25-year-olds because of this. There are certain things that can lower your car insurance premiums at least a little bit, though. Factor 1 is your grades, Factor 2 is your credit score, Factor 3 is the car you drive, and Factor 4 is your driving record.
Factor 1 of 4: Your grades have an impact on your car insurance rate
If you are still in school, keep your grades up. You can get a good student discount through most competitive car insurance providers. You may qualify for the good student discount if you are:
- Going to school full time – either high school or college
- Under the age of 25
- Have a 3.0 grade point average (B or higher), are an honor’s student, or are on the Dean’s List
Factor 2 of 4: Your credit score affects your rate
If you have paid a regular bill, like a monthly cellphone bill or utility bill, bought anything on credit, or even have a checking account, you should have a credit score. The higher your credit score the better. Car insurance providers charge lower rates to people with a score of 580 or higher because they are likely to be more responsible.
You can get one free credit report per year through credit tracking agencies like TransUnion and Equifax, although you may have to pay for your credit score. If you don’t have a credit score or your score is low, you can raise your score by doing the following:
- Pay at least the minimum payment due on time on all of your bills every month.
- Get a secured credit card, use it to make at least one purchase each month, and pay off the entire balance on time each month.
- Ask your parents if they will make you an authorized user on one of their credit cards.
Factor 3 of 4: How “safe” is the type of car you drive?
Drive a safe car with extra safety features and less horsepower. You are less likely try to show off and drive recklessly if you are driving a safer car with a less powerful engine. The Insurance Institute for Highway Safety (IIHS) has a list of vehicles that are considered safer for younger drivers. You will most likely pay less for car insurance if you buy a car that is on that list. Some of these cars include:
- Ford Taurus (2009 and newer)
- Hyundai Sonata (2011-2014)
- Toyota Camry (2012-2013)
- Tip: You can get lower car insurance premiums if you successfully complete a driver’s education course.
Factor 4 of 4: Your driving record plays a big part in your monthly fees
Drive safely and obey the speed limit at all times. Young people with a clean driving record always pay less for car insurance. Slow it down. It will take you less time to get there if you are obeying the speed limit than it will if you’re involved in a collision because you were in a hurry.
By studying hard, paying your credit card in a timely fashion, and driving a “safe” car, you can help keep your car insurance payments lower than average until you’re past the crucial age threshold of 25.