How to Reduce the Cost of Insurance when Buying a Car with a Loan

If you are buying a car with a car loan, you most definitely have to have it insured. Compare car insurance, and get as many car insurance quotes as you can. There are ways to get your insurance and other associated costs down if you shop around and be honest with yourself.

There are a number of issues to think about when buying a car with a loan, and car insurance is definitely one of them. Whenever we buy a car, we must be clear about our intentions, the total costs of owning, and be practical about the resale value of that car in the future. Here is a look the issues related to insurance and getting a loan.

  • Be clear on your reasons to buy. Do not kid yourself with the reasons why you are buying your car. It is worth being honest to yourself. Sometimes what we want, will cost more than what we need. Only buy what you want if you are sure the rest of your budget can accommodate it. Modified cars will tend to have higher loan repayments and higher insurance costs than standard passenger vehicles.
  • Looking around for your loan.Shopping around for your car loans is extremely important. The cost of loans is changing all the time, and you should never just think that your bank will give you the best deal. There are also different types of car loans, such as loans where you can re-use your repaid monies, if you are short of cash. Secured loans are normally cheaper, and this will mean your car is actually encumbered.
  • Where to look for insurance.Many people will assume that because they are getting their loan through their bank, it is better to get the insurance through their bank too. This is normally not the case. You should always compare car insurance because your bank is normally only a broker. This is only another way for them to earn money from you, and will not impact whether you get the loan or not.
  • Insurance Payments. If you can pay yearly, you will save a considerable amount compared to monthly payments. At the same time, there is no point getting a loan to cover the insurance, unless the difference in payments is less than what you would pay monthly for insurance – you have a few calculations to do.
  • Type of car.The type of car you want to buy will often be greatly affected by your loan. Loan and insurance premiums will increase greatly with older cars. Sometime you will get a comparatively better resale price in the future when you buy second hand. When you buy new, know the value of the car will drop greatly the minute you drive it off the lot. On the other hand, the actual running cost of a newer car can be drastically lower than older cars, and that difference might even be your insurance premium.

Don’t forget your other costs. There will be many other costs other than fuel. There will be maintenance, broken windscreens, car parking and road tolls. Many of us forget to factor all of these costs. There are even a few more hidden costs, such as, car parking fines, speeding fines, driver’s license and stamp duty when you buy. Make sure you are aware of all of these costs. Sometimes they will add up to more than the monthly cost of your insurance and loan repayments.

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