One of the reasons why a lot of motorists, particularly younger ones, or those with poor driving records, pay too much for their car insurance is because they quite simply drive the wrong cars. They may be older ones with poor safety records, or have larger engines which push them into a higher insurance bracket.
Of course many of us don"t really consider the insurance angle when we get a car. It may be one that we are given, or picked up for what we thought was a bargain price, or which we simply liked the colour of. We know that new cars with smaller engines are usually cheaper to insure but few of us think that we could afford a new car. We couldn"t pay the deposit let alone the monthly repayments. Is there a better way though?
There is a scheme known as Personal Contract Hire (PCH) which allows individuals to have a brand-new car with a small deposit and monthly payments over between about three or four years. At the end of the contract period the car can either be handed back to the finance company or purchased for an agreed price. Many of the motorists who use this system hand the car back at the end of each period and take out a new contract on another new vehicle. This means that they always have a car available which will be both reliable and economical to run, with a manufacturer"s warranty which should last until at least the end of the contract period and possibly much longer, so no unexpected repair bills are likely!
Here is an example
We took a careful look at the financial implications of a young driver aged 19 who owned an elderly 1600cc Ford Escort and compared the running costs over 5000 miles and they made interesting reading.
Our fictitious young 19-year-old student from a quiet suburb with a one-year old driving licence and clean driving record compared quotes for his car insurance based on his 1600 cc Escort and the average cost of the five cheapest quotes he got was £1918.05. He repeated this for a 1000 cc Hyundai and this fell to £1239.96, a potential saving of £678.06.
Then we looked at running costs. By driving his Escort very carefully he may or may not have managed 25 miles to the gallon; at say £1.30 per litre, or £5.91 (nearly 6 quid!) Per gallon his 5000 miles would cost him £1182. However the smaller and more efficient car should easily exceed 50 mpg, meaning another saving of £591. Total savings now come to £1529.
His old Escort would need an annual MOT for about £50 so savings are now £1589.
He could probably get a car such as a Kia Picanto for a deposit of £129 plus another £129 per month so in the first year it would cost him £1677. Having that new car would therefore cost him just an extra £148 in the first year and in subsequent years (bearing in mind he paid the deposit in year 1) just £19! It could be expected to start every morning and the girl next door would no doubt be very impressed that he was driving a shiny new machine rather than an old banger.
Even that is not the end of the story. Older cars break down and can cost a lot of money to repair. They burn oil and need regular topping up. They need new tyres and exhaust systems on a routine basis, whereas the new car would come equipped with new ones which should be expected to last throughout the contract period. So, our fictitious driver probably would save money by leasing a new car. Plus he could sell his Escort and either bank or blow the proceeds, as a bonus.
Okay this is a fictitious motorist so the results would not be the same for just about anyone else but there is a wide choice of cars to choose from with extremely low deposits. He could have spent a bit more and got a seat Ibiza 1.4 TOCA for another for another £20 deposit and an extra £20 a month (these are today"s prices, don"t yell at me if they change) or even the ever popular hot, sporty Ibiza FR for £189 deposit and £189 monthly, although what a car like this would cost to insure I shudder to think. Terms and conditions vary and so you would need to chat with someone who knew what he or she was talking about, in order to work out whether or not it was suitable for you. You could start by ringing Brian McManus at Lookers on 0161 333 3344 to get a quote.