Owning a second vehicle can be a luxury for some families, while for others it's a necessity. Depending on where you live, you may not have another option to get to work or around town. However, the cost of running and maintaining your car can really add up.
Add to that the cost of gas and auto insurance, and your second vehicle may be stretching your budget. But it doesn't have to. Consider these five tips on how to afford a second vehicle.
If you have home insurance or tenant insurance, consider using the same insurance provider for your auto insurance. Insurance companies will generally issue a multi-policy discount for your combined premiums, which could save you up to 15%.
You may also be eligible for a multi-vehicle discount if your first vehicle is insured under the same policy. This could save you an additional 10% to 15%.
While you are on the phone with your insurance provider, don't forget to ask about further discounts. You may be able to save if you are part of an association, through alumni discounts, or if you purchased roadside assistance.
Your affiliation, or your spouse's, with a school, employer, or union could qualify you for a discount that may save you as much as 30%.
Belonging to a roadside assistance program has many perks, including a chance to lower your auto insurance premium by up to 15%.
Your insurance company may offer a discount for usage-based insurance (UBI). Since this technology is still relatively recent, they may not have offered it when you first signed up.
UBI is typically a device you can plug into your car or an app you download on your phone. It tracks how fast you are going, accelerating and braking, the times you are typically on the road, and the distances you travel. UBI will analyze your driving behaviour and give you a rating. A good review can save you up to 25% on your insurance.
Your insurance company may offer a discount for installing winter tires during the colder months. However, this discount varies by province. In Ontario, insurance providers are required to offer a discount, which can act as an incentive, while in Quebec it is mandatory to have winter tires.
A vehicle's value depreciates the moment it leaves the lot. In the event of a collision, your insurance provider will typically reimburse you for the depreciated value of your car. This means your aging vehicle may not have much value left in it.
Weighing the cost of your collision coverage with the value of the car and the chosen deductible can help determine if this option is right for you.
For example, if you have a 16-year-old car that's worth about $1,000 and your deductible is $1,000, you won't benefit from the coverage.
If your car is a paperweight more often than a functioning vehicle, it may be time for an upgrade. Buying a newer car may save you hundreds if not thousands of dollars in repairs. It comes to a point where it may not be worth putting any more money into an aging vehicle.
Although insuring a second vehicle may increase your premium, it may save you agony and money in the long run. Additionally, many new cars are stocked with high-tech safety gadgets, are more fuel-efficient, and have modes for economical driving.
Shopping around for car insurance can help you score a better rate. If you haven’t compared quotes since you bought your car, you could be overpaying for auto insurance now.