As the prices to buy or lease a car are on the decline, many consumers are seeking to find the best transportation method to meet their personal needs. One of the biggest issues to consider when buying or leasing a vehicle is the influence that either option can have on your auto insurance rates. According to experts, buyers must beware of more than just the cost of the vehicle itself, as insurance premiums and prices may vary based on a buyer’s choice of purchase.
The Insurance Benefits of Buying vs. Leasing
Many individuals who prefer the fresh new car smell every 2-3 years may be more attracted to leasing a vehicle, as leasing gives drivers more freedom to update their car options upon the end of the lease agreement. Leasing, however, often results in less attractive insurance costs. Technically, when a driver agrees to a lease agreement, the driver is admitting that the vehicle still legally belongs to the manufacturer. As a result, a driver’s damage their leased vehicle may be mostly covered by their insurance provider, however, the driver of a leased car may still be responsible for additional expenses!
For example, if you choose to lease a car that is worth $30,000, your insurance company / plan may not necessarily cover the entire cost of this vehicle if it is in a full-wreckage accident. Unfortunately, this means that not only do you lose your car, but you are additionally responsible for repaying your lease provider / manufacturer any leftover amount that the insurance company would not cover. Due to this potential risk, many drivers feel more confident in buying a car vs. leasing. If a full-wreckage accident were to occur to your car that you own, then you may still lose out if your insurance policy does not cover the full repair or replacement costs, but you’ll at least be able to rest assured knowing you don’t owe a lease provider thousands of dollars!
Do Insurance Rates Change with a Leased Vehicle?
Some insurance providers may vary their rates if a vehicle is leased vs. bought; however, each company has its own standards and formulas for assigning payment quotes for its customers. As a result, drivers with a strong credit history and clear driving record will most likely be able to purchase insurance for either a leased or bought vehicle without any substantial insurance variations. Ultimately, while the cost of any driver’s insurance may potentially be influenced by whether or not the car is leased, a driver can typically expect to have their insurance rate more significantly influenced by the following key factors:
- Age
- Location
- Driving experience
- Driving history / record
- Credit reliability / history
- Policy type / coverage options
