Who doesn’t love getting a new car? There are just so many good things about a new vehicle, such as that new car smell, the latest tech features, and a bright, shiny look. And did you know that buying a new car can actually save you on your auto insurance through a new car discount?
The Advantages and Disadvantages of Buying a New Car
Advantages of Buying a New Car: Buying a new car has many advantages, first and foremost is the excitement you feel while driving your new car. But that’s not all.
- A new car gives you access to all of the newest features, depending on the trim package you choose. This includes the latest safety features, which can also help reduce what you pay for car insurance.
- The car is guaranteed, at least for a few years, through factory warranties. You also have the option of extending your warranty beyond the initial three years.
- You can qualify for specials and incentives at the dealership when buying a new car. This includes lower interest rates, though you need a good credit score to qualify for the lowest rates.
Disadvantages of Buying a New Car: While getting a new car is exciting, there are also some things that can really put a downer on the experience. This is mostly in your pocket book, but also extends to the depreciation in the value of the car.
- The price of a new car is way more expensive than buying a used car. According to Kelley Blue Book, the average new car costs around $37,000, while a used car costs around $20,000.
- Sales tax on a new car is way higher than it is for a used car due to its increased value. Depending on where you live, this amount can be quite high. For example, in Alabama, expect to pay a whopping 11%.
- The loss in value after you drive off of the lot is pretty steep. Within the first year, expect a new car’s value to depreciate by at least 20%, with the value depreciating even more the older the car gets.
Fortunately, some insurance companies offer a new car discount, which can save you money and offset the increased cost of a new car over time.
What Is a New Car Discount?
Some insurance companies offer a discount when you buy a new car. Your car can qualify if it is no more than three years old, or less with some insurance companies. For example, Allstate offers a new car discount for a current model year, or one year prior, if you are the first owner of the vehicle.
The new car discount is, on average, between 10% to 15%. Once you qualify for a new car discount, you can probably expect it to stay on your policy for at least three years from the time you get it.
While buying a new car is expensive, you can save money by taking advantage of specials and rebates at the dealership and with discounts on your car insurance, including a new car, vehicle safety, and others discount types.