How to Finance a New Car With Car Insurance Rates

When shopping for cars, many people neglect to research and include the insurance rates on the car and often wind up in a state of shock when they discover the car's bottom-line cost. There are numerous factors to consider when buying a car, but there are some things you can do to understand how to finance a new car with insurance rates.

Instructions

1

Determine how much coverage you need. If you are paying for the car in full, you have the option of insuring your car for as little or as much as you want. You can opt for the minimal insurance required, which varies by state but usually is liability at a minimum, or go for the whole package and get comprehensive insurance. Comprehensive covers damage that occurs to your car, while liability strictly covers you for accidents.
Cars Direct explains that automobile lenders typically require comprehensive coverage, since they want insurance to protect what they are financing. Banks and other lenders know that if a car is not drivable, the owner is likely not to make the payments; therefore, they require insurance that will cover repairs should the car be damaged. Also, if it's not in operating condition and the owner should default on the loan, the lender needs to be able to sell the car in order to recover as much of the debt as possible.

2

Research the insurance rates in your state based on the car you are considering. Auto insurance companies will provide you a quote based on the information you have; the more information you can provide them, the more accurate your quote will be. Sites such as Esurance offers quotes from several companies. In order to get the most accurate quotes, supply as much information as possible, such as your driving record, and, if you have been car shopping, at least one vehicle identification number (or VIN, the number usually found on the driver's side windshield). The VIN and your driving record will give you a more exact quote that you can use to figure what the total cost of the car will be in the end. This number may surprise you and could help you determine what vehicle will fit into your budget.

3

Include gap insurance in your insurance quote and total cost of the vehicle. The best way to define gap insurance, according to Car Insurance, is insurance that covers the difference between what your car is valued at and what your current payoff with the bank is on the car. Gap insurance is valuable if you owe more on your car than it is valued at if it is involved in a wreck that causes it to be considered totaled or unable to be repaired. Without gap insurance you could end up making payments on a car you cannot drive.

All of these factors should be considered when financing a new car. The insurance on a new car is more costly than the insurance on a car that is not financed.