Becoming an Adult

Financing Your First New Car? 4 Things You'll Need To Know About Your Auto Insurance

2 April 2018

Robin King

If you're in the market for your first new car, and you're going to be financing the purchase, you'll need to know a few things about auto insurance. Insuring a financed car is slightly different than insuring a car that you own free-and-clear. For one thing, you'll need full-coverage insurance, meaning that you won't be able to settle for the basic liability that most states require. For another thing, the finance company will be listed on your insurance, and they'll be compensated should something happen to your vehicle. Here are four other tips that will help now that you're looking for full-coverage insurance for the car you're purchasing.

Color Doesn't Affect Insurance Rates

You might have heard people say that insurance companies charge different rates depending on the color of car you've purchased. For instance, a red car may cost more to insure than a tan car. However, that's not correct information. The color of your car will have no bearing on the price you pay for insurance coverage. Your past driving record and credit history will play a role in determining the cost of your coverage though.

How You Use Your Car Does Affect Rates

When it comes to determining the cost of your coverage, there's one other issue that will be looked at; how you use your car. For instance, if you use your car for business purposes, or if you put a lot of miles on your car – even for leisure purposes – your insurance rates may be higher than you expected. It's important to note that if you plan on using your car for business purposes, you'll need to tell your insurance company. If you don't tell them, they might not cover the cost should you be involved in an accident while you're conducting business.

Coverage is Determined by Your Insurance Package

If you're looking for full-coverage protection for your new car, you'll need to put together the proper coverage package. You might not know this, you won't have complete protection if you don't opt in for the right coverage. If you're not sure about the coverage you'll need, be sure to speak to an insurance agent when purchasing your insurance.

You'll Need Coverage Before You Take Possession of Your New Car

If you're going to be financing a new car, you'll need insurance coverage before you can drive your car off the lot. If you haven't purchased your own insurance prior to financing your car, the dealership may add temporary auto insurance coverage to the contract. This coverage will protect you and the car until you can secure your own insurance policy. However, it's important to note that this coverage will be more costly than the coverage you purchase for yourself, so it's better to find your own first.

Share