Smart Strategies to Lower Your Auto Insurance Costs
Are you looking for ways to save on your auto insurance premium? Did you know that your credit score and other financial factors can have a significant impact on your insurance rates? Here are some smart ways to help reduce your auto insurance costs:
Improve Your Credit Score
In many states, your credit score can be used to determine your auto insurance premium. If you have a good credit profile, you may pay an average of $2,014 annually for auto insurance. However, if you have an excellent credit-based insurance score, you could save up to $250 per year on average. So, if you work on improving your credit profile, you could save up to $500 per year for a two-car family.
Pay Your Bills On Time
On-time bill payment is essential when it comes to your credit score and auto insurance premium. If you have unpaid credit card bills, it's crucial to start whittling them down to improve your credit score. Not only will this help lower your auto insurance costs, but it can also benefit your overall financial health.
Use Your Tax Refund to Reduce Your Credit Card Debt
If you're in line for a tax refund, consider using it to pay off high-interest credit card debt. This can be a smart move not only for your auto insurance premium but also for your overall financial well-being. Just make sure not to turn around and use your credit cards to buy more than you can afford.
Consider Insurance Costs When Buying a Car
If you're planning to buy a car this year, it's essential to consider insurance costs as part of your buying process. Keep in mind that a fancy car can cost up to $500 more per year to insure than a less flashy car. So, if you're on a tight budget, consider a more affordable car to save on auto insurance costs.
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If you own a car, your auto insurance premium is riding on how good you are at paying your bills on time, and other signals of financial health.
According to Bankrate.com, the average auto insurance premium this year is about $2,014 for someone with a good credit profile. But if your credit-based insurance score (it's related to your regular credit score) Get Your Free Credit Score in Canada is in the "excellent" tier, the average annual premium cost is $250 lower. If you have a 2-car family, working on improving your credit profile could save your household $500 a year if you go from good to great.
Most states allow insurance companies to consider your credit profile when determining the premium you will be offered. Only California, Hawaii, Massachusetts, and Michigan prohibit or restrict the use of your credit data in figuring out premiums.
If you live in a state where your credit can be used to determine your auto insurance premium, I think you've now got yet another reason to work on improving your credit. On-time bill payment is key. So too is whittling down any unpaid credit card bills.
If you're in line for a tax refund, using it to reduce your credit card debt is not just good for auto insurance, it's a really smart move if you are paying a high interest rate. Just promise me you won't turn around and use your credit cards to buy more "wants" than you can afford.
And for those of you who anticipate buying a car this year, I sure hope you will focus on the insurance cost as part of your buying process. A fancy car can cost $500 more a year to insure than a less flashy car.
Auto insurance premiums can be costly, but by taking these steps, you can help lower your costs significantly. Improving your credit score, paying your bills on time, using your tax refund to pay off debt, and considering insurance costs when buying a car are all smart strategies to help you save on auto insurance. So, start implementing these tips today, and you'll be on your way to a more affordable auto insurance premium!