Introduction

When shopping for a vehicle, most buyers focus on the sticker price — but your insurance premium is a cost you'll pay every month for as long as you own the car. Understanding how the new vs. used decision affects your rate can save you hundreds of dollars a year.

New cars are generally more expensive to insure. Because they carry higher market values, the cost to repair or replace them after an accident is greater. Lenders also typically require comprehensive and collision coverage on financed new vehicles, adding to your monthly premium. Features like advanced safety technology can help offset costs, but they can also be expensive to repair.

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Used cars, on the other hand, often come with lower premiums. A vehicle that has depreciated in value costs less to replace, which reduces what an insurer needs to pay out in a claim.

If you own the car outright, you may also have the flexibility to drop comprehensive and collision coverage, lowering your rate further.

That said, a used car isn't automatically cheaper to insure. Older vehicles may lack modern safety features, which can increase rates. Repair costs on certain makes and models can also be high regardless of age. The key is to request insurance quotes on any specific vehicle before you buy.

The Bottom Line

A new car will almost always cost more to insure, but the gap varies significantly by make, model, and your coverage choices. Always factor insurance into your total cost of ownership.