To buy or to lease. For people looking to drive a new vehicle, it can be a difficult question. Leasing has become an increasingly attractive option in recent years. Since almost all cars are pretty poor investments (even if they don’t breakdown), leasing reduces the commitment, allowing you to drive a brand-new car without having to cover the $20k+ sticker price.
All you have to do is pay your monthly payments, and almost everything else is covered under your lease. When your lease is up, you can switch over to the latest model for a comparable price, or you can purchase the car you’ve already been driving.
Of course, leasing has some caveats. In addition to the vehicle not really being “yours”, you’ll be limited in mileage, you’ll have a narrower selection, you’ll likely be stuck with the vehicle until your lease is up, and there can be other hidden costs and limitations.
One additional cost people often talk about is your insurance premiums. But does it actually cost more to insure a leased vehicle than it does to insure a new vehicle that you’ve purchased? Before we can answer that, it’s important to understand what insuring a new vehicle looks like.
Insuring a New Vehicle
Whether you’re leasing or buying, if you’re driving a new vehicle, there are certain add-ons that should be included in your insurance policy.
Coverage for both new purchases and leased vehicles should have comprehensive coverage and collision coverage. Collision coverage pay for repairs to your vehicle should you be involved in an accident with another vehicle or an inanimate object. Comprehensive coverage, on the other hand, covers repairs to your vehicle in situations such as weather damage, vandalism, or crashing into a wild animal.
Additionally, whether you’re leasing or buying, insurance for new cars should include gap coverage. New vehicles generally lose their value very quickly. If you total your car shortly after buying it, you could be upside down on what you still owe vs what the car is worth. Gap insurance pays the difference, allowing you to move on to your next vehicle unburdened.
Lease Insurance vs. New Purchase Insurance
Insuring a leased vehicle is generally considered more expensive, but that doesn’t tell the full story. With a leased vehicle, you will likely be required to include certain coverages in your policy. This not only includes addons such as comprehensive, collision, and gap coverage, but it may also affect the monetary limits you have on coverage.
Your leasing company may also require you to have a lower deductible, which can increase your monthly premium cost.
All of these features and addons ultimately come with a higher insurance price tag than you would see on any used vehicle. But more the most part, this is the type of policy you should want for a new vehicle anyway. One of the greatest benefits of purchasing a new vehicle is piece of mind. You don’t want to have surprise car expenses popup, ruining your monthly budget.
A quality insurance policy can help keep this from happening.
Ultimately, new vehicles come with higher insurance costs whether you lease them or buy them outright. However, there are still ways to reduce costs by bundling your insurance plan, shopping around, and knowing what you need (and what you don’t). We can help with that.
At Link-Hellmuth, we do the insurance legwork for you. Simply contact us, tell us about your needs, and we’ll find you the best policy for the best price available. Don’t let insurance scare you away from your next vehicle. For affordable auto insurance in the Springfield, Ohio area, contact Link-Hellmuth today!