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Is auto insurance cheaper if you lease or buy a car?

Is auto insurance cheaper if you lease or buy a car?

When you shop for a car and decide how to purchase it, be sure to think about insurance rates and other ongoing expenses. These costs aren’t always simple to predict; some vehicles are easy to buy, yet ownership is difficult to afford. The choice between buying and leasing has a major impact on a wide range of expenses.

Calculating premiums

Insurers generally charge the same premiums for equivalent coverage on owned or leased autos. Other factors like the vehicle model, your location and your age are more likely to affect rates. Nevertheless, you may be required to carry different types of coverage depending on how you obtain the car. This could have a significant effect on the total cost.

Required coverage

A lease agreement or loan will probably demand full auto insurance. You’ll need to pay for liability, comprehensive and collision policies. This protects you as well as the bank or lessor if a crash occurs. On the other hand, you only have to buy liability coverage if you buy a vehicle and pay for it in cash.

A lease may necessitate more costly liability insurance as well. For instance, you could need to buy a plan that covers a maximum of $30,000 in property damage rather than $5,000. You’ll probably only have to purchase the minimum required by law if you take out a loan or pay in cash. However, you won’t have as much financial protection in an accident.

What’s included?

Many leases and new cars come with roadside assistance. A lessor may provide gap insurance; it ensures that you don’t owe money after a total-loss collision. If you purchase a used auto, it’s much less likely to include any type of coverage. You will have the option to pay for these extras separately.

If you prefer full, comprehensive coverage, leasing won’t have much of an impact on your premiums. On the other hand, car owners have more freedom to reduce rates by carrying less coverage. Leases often include one or two insurance add-ons at no extra cost, but motorists pay most of the expenses. If you need affordable insurance, please contact our independent Austin, Texas agency to learn more.