Buying a new car?

Question

Ok, so I'm buying a new car. Here's my situation.

I have about 15000 right now that i put away for college. However, right now, im paying 200 a month for my current car, and nearly 300 for car insurance on it.

What I want to know is, should i pay in full for the new car, and get some type of liability insurance for it, thereby saving me about 250 a month versus putting only half down and still paying for full coverage?

I'd really rather not dip into this college fund/emergency fund, but the thing is, I'm working now as well, so I could make that money back fast enough to pay for college. I guess what I'm asking is, in the long run, which would I save more money on? or which would you do?

(the new car btw is a toyota yaris sedan)

Answer 1

Insurance is to cover losses that you can not comfortably cover yourself. When a vehicle is financed, the lien holder will require that you have full coverage to protect their investment in the vehicle. If it is paid off, it is your choice to cover the car, or to risk it being wrecked or stolen and you having to bear the entire cost of the repair and/or replacement yourself!

I would recommend that you continue to insure your vehicle. If you want to take some of the risk yourself, you can increase the deductible on your policy. This should lower your costs, due to the decrease in risk for the insurance company! If something were to happen to your car, and you only had liability, you would have no car, and no money, which would put a serious crimp in your college plans!

Answer 2

This is more of a personal finance question than a true insurance question. I'll start out by congratulating you on saving such an extraordinary amount of money at such a young age! Some things to think about:
1. That spiffy new Yaris is going to depreciate the moment you drive it off the lot. Your education won't depreciate with time.
2. Why don't you just pay off that old car and cut your costs that way? You could also call your insurance and lower the coverage to liability only. The premium is higher now because it's financed and legally you have to carry full coverage. Liability is cheap, a huge chunk of the 200 a month you pay is for collision.
----Your education is the better investment, and it will pay you back tenfold. You're working now, but wouldn't it be nicer to spend more time having fun, being young, and getting good grades? This is going to be harder to do if you have to work to play catch-up on the new car. Don't get caught up in that "everybody has new and better stuff than me" thing when you're young...you have a million years to reward yourself for everything you're earning now.

Answer 3

You should look at something at most a couple of years old. The vehicle has already taken depriciation ond you can save money there.You should also consider a model with a better insurance rate. This will help save on insurance premiums. Although toyota yaris is a cute small car you should look into safety ratings.

Answer 4

it sounds like everyone answering is an insurance salesman!!!

i'd buy the car and go with liability... yes, if you were to wreck it you would be screwed... but they can screw you pretty bad even with full coverage. i totalled a 4 month old truck a couple of years ago, and ended up losing about 14 grand... and a yaris is an economy car, so they're gonna hit hard if it's totalled or stolen.

life's a gamble...

i'd go for the cash.

Answer 5

that's good thinking. Either what you've said, or shop for cheaper insurance.

Answer 6

If you get PLPD only, you crash & it's your fault, you're screwed.
Keep coverage but w/a high deductible.