How Much Is Car Insurance? (12 Factors That Determine Your Rate)

Written by
How Much Is Car Insurance

How much is car insurance? This is a question that many people ask themselves when they are trying to purchase their own policy, buy a new car, or understand the reasons behind the quotes and rates they’re receiving for their much-needed car insurance

If you don’t know the answer to this question, then it’s time to read on! In this blog post, we will discuss 12 factors you need to know that will determine your rate and help you understand the rates you’re receiving for your car insurance.

1. Location

Depending on your location, you could be facing a higher car insurance deductible. Insurance companies factor in both your state and zip code. Depending on how prone your area is to theft, crimes, floods, or wildfires, you may be subject to a higher rate. If you live farther away from a major city, you’re less likely to pay a higher price.

2. Type of vehicle

The car make and model that you drive is a significant factor in your rate. For example, suppose you are driving an expensive new car and financing the payment. In that case, your insurance will likely be pricier than if you were to drive around in an older model or economy-sized car that you bought outright with cash. 

The reason it’s so much more expensive when you finance a vehicle is due to the price of sports car parts and the statistics on crashes with newer, sportier vehicles. Sports cars account for vehicles with the highest fatal accident rate of 4.6 cars per billion vehicle miles.

3. Driving history

Are you a safe driver who has never had a speeding ticket, or have you been in trouble on the road? Your driving record, including any driving citations or violation tickets, can play a significant role in your car insurance deductible and rate. In addition, statistics show that people who have one or more violations on their driving records are at a higher risk of getting in an accident.

4. Driving experience

Young drivers are at a higher risk of accidents than older ones because they take their driving less seriously and often do not follow all traffic laws. This is why younger drivers are usually put into driver’s education courses for beginners or refresher lessons to improve their driving skills. 

The longer you drive, the less likely you are to get into an accident or act against the law. Car insurance companies will frequently consider your age and driving experience when determining your final rate.

5. Credit rating

Your credit rating has a significant impact on how much your car insurance will cost or if you’re even approved for a rate at all. If you have had late payments, judgments, or bankruptcies in the past, your rate will likely be higher than someone with excellent credit who doesn’t have any blemishes to their name.

Thankfully, there are many ways to fix your credit rating, such as a Credit Builder Plus loan, which helps build your credit safely and efficiently. We recommend MoneyLion’s Credit Builder Plus loan that not only raises your credit score while you save but, also allows you to have access to a portion of your loan funds immediately. It’s a win-win!

6. Gender

Gender can play a role in your car insurance rate if you’re a younger driver. While gender is not a deciding factor in your rate, it can affect how much you’ll end up paying for insurance. Young male drivers will typically pay more than female drivers of the same age because statistically, they have been proven to be riskier and therefore pose an increased threat to their insurer.

7. Annual mileage

Depending on the state you live in, the mileage on your car can impact your insurance rate. The more you drive, the more likely you are to have an accident on the road or encounter a problem with your vehicle.

8. Criminal record

If you have a criminal record, it can also affect your car insurance rate. While the number of points on your driving license may not be taken into account by an insurer, some carriers will give drivers with a clean history lower rates than those convicted for certain crimes, but it all depends on state laws.

9. Coverage level

Coverage levels will impact the final amount of your car insurance. Generally, more coverage will cost more money, so if you plan to purchase gap insurance or add in an umbrella policy for extra protection, these features come with higher premiums. Take the time to read through each policy to see if it’s right for you.

10. Insurance agency

The insurance agency you choose will impact the final cost of your insurance. Insurance providers are independent agencies that determine their own rates. The best way to find the options that are available in your area is by getting a quote from each agency along with copies of the type of coverage they offer.

11. Education level

If you have a college education, you’re less likely to pay high premiums because it’s assumed that you’re less likely to file a claim. While there is no statistical proof of this claim, many insurance companies still offer educational discounts on their rates.

12. Ownership of your car

Insuring a financed or leased car may cost more than if you completely own your vehicle, as the monthly payments will factor into your rates. Plus, insurance lenders can push for more coverage on a financed or leased car than you might have wanted to purchase in order to protect themselves if something happens to your vehicle.

Find the best car rate for your vehicle

The answer to “How much is car insurance for your vehicle?” isn’t straightforward. Many factors determine how much car insurance will cost on average, including your age, gender, driving record, driving citations, violation tickets, credit scores, residence, place of employment, the type of coverage you need, the type of coverage you want, and more.

If you want to lower your rate or find a better price, it’s time to evaluate each factor and see how you can work to get the best price possible for your car insurance. Whether you purchase an older car or boost your credit with MoneyLion’s Credit Builder Plus loan, you’ll be able to score the best rate on your car insurance.

Sign Up
Sign Up

Build your credit and save

Join Credit Builder Plus to get a loan up to $1,000, credit monitoring, exclusive rewards, access to 0% APR cash advances, and more. Over half of members raise their credit over 27 points within 60 days!

Sign Up