How does car insurance work? (also whats better buying a car vs leasing)?
Tuesday, April 27th, 2010 at
4:01 pm
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shortzyboi asked:
well im 16 right now. planning to save up till 18 and buy a car. my first question is, how does car insurance work? i know you have to pay monthly and depending on each car its different but would car insurance be cheaper when the car is leased? or when its bought?
well im 16 right now. planning to save up till 18 and buy a car. my first question is, how does car insurance work? i know you have to pay monthly and depending on each car its different but would car insurance be cheaper when the car is leased? or when its bought?
also i know each car depreciates alot every year. at first i was thinking of leasing it but now im not sure. can someone tell me what would be a better choice on the long run?
Paul
Filed under: Other - Cars & Transportation
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Randall
Insurance companies have the data on millions of miles of travel for millions of people of all ages; using this data, they know exactly how likely you are to get into an accident and how much it will cost. Using this data, they bill you ahead of time for your accidents in monthly increments (actually, this is a gross simplification but you get the idea).
Do not lease a car!
Leasing is total fail – the only way leasing works in your favor is when your company pays for it (or you are able to deduct the payments from your taxes). The leasing company figures out how much you will drive over the life of the lease, how much the car will depreciate, and what they will be able to sell the car for when – they add all this up and divide it by the number of months of the lease. Then they add in their profit. You have to pay a couple thousand dollars to begin the lease and when the lease is over, they will bill you for any mileage over what they calculated and bill you for any loss when they sell the car. Most leases are bogged down with so much fine print (and BS) that you have no real idea of the cost you only know what the monthly payments are — remember that you have to pay a lump sum at the beginning and another at the end.
Leasing is for losers – if you can work the lease so your company is the loser, good for you.
Katie
Basically car insurance protects you from incurring financial loss during a car accident or because of damage to your car. you can incur financial loss during an accident if you are sued for causing a car accident, injuries and damages to properties. So unless you have car insurance you might need to pay thousands of dollars in settlement during a car accident.
And unless you have insurance you may need to spend for repairs on damages to your car.
Also, your car insurance would be a bit more expensive on a leased vehicle since you will need to buy GAP insurance on a leased car.
Do check out the article I referenced below, it will give you a good idea of what car insurance is. Also, don’t forget to shop around on the Internet and compare rates! You can save a lot of money by doing that.
Hope this helps!
Lawrence
Financed cars is more expensive to insurance cause it requires full coverage. You can compare how much you would pay for full coverage of this car using this tool – autoinsurance.hotusa.org