Insurance specialists are warning car owners to be wary of the ‘cash for clunkers’ program and its perceived savings. According to many analysts, while the Car Allowance Rebate System (CARS) may seem to offer motorists with tax refunds they can use to buy new cars, the federal program may not be as good as previously thought.
The ‘clunkers’ program was originally intended by the federal government to get gas-guzzling cars off the nation’s roads. With the economic slump, however, the program has served another purpose: reviving falling car dealer sales. In less than a week, hundreds of thousands of car owners applied for the tax rebates, forcing the federal government to suspend the ‘clunkers’ program indefinitely, fearing that the $1 billion allocated could soon run out.
Now, insurance experts are telling American motorists about the possible mistakes trading in an old car for newer ones can yield. According to industry sources, the tax rebates received from trading in old vehicles can quickly be used up by more expensive insurance for new cars. They also point out that the insurance costs for newer vehicles are expected to climb for the next few years, making any savings from the ‘clunkers’ program useless.
Analysts say that car owners stand a higher chance of saving money by simply doing their research before purchasing auto insurance. They add that by simply being informed, drivers can find the best insurance coverage and prices for their needs.
Basically, cars that are harder to repair are more expensive to insure than cars that are relatively easier to fix. Experts say that expensive cars require specialized mechanics to fix, making it more costly for insurance companies to shoulder. Because of this, car owners can expect higher premiums.
Some cars are also more prone to theft than others. This makes them significantly more expensive to insure. Specialists agree that installing a top of the line anti-theft system can help slash insurance costs.
Larger vehicles with lower safety ratings also tend to be more costly to insure. Experts say that larger SUVs and sports cars are involved in more accidents. Because of this and other statistics, insurance providers slap higher premiums on them. Avoiding high-performance cars can help car owners save money on insurance.
Safety features like anti-lock brakes, side airbags, and four wheel drive transmissions will also lead to lower insurance premiums, industry sources explain. These features will reduce the likelihood of an accident and lessen the possibility of an insurance claim.