New car purchases are on the rise, but there are insurance implications

New car sales are on the rise, with total sales for December 2023 reaching 1,396,700 units, according to a J.D. Power report.

Sales increased by 13.2% from December 2022, demonstrating the popularity of new cars among drivers. In the fourth quarter last year, new-vehicle sales are projected to reach 3,826,000 units, a 9.8% increase from the fourth quarter of 2022.

"December results cap[ped] off the year with a strong performance, illustrated by double-digit year-over-year sales growth and the second-highest consumer expenditure on new vehicles ever recorded for the month," said Thomas King, president of the data and analytics division at J.D. Power, in the recent report.

Used vehicles aren’t having the same heyday as new vehicles. As of October 2023, used car sales were down 4%, according to CarEdge data.

If you’re buying a new car, you want to make sure you have the right insurance in place, at the right price. It's important to compare several auto insurance companies, as well as their coverages, before signing up for a policy. Credible’s car insurance marketplace simplifies this process. Get started today.

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Car prices are finally trending down

While prices for new and used cars are trending down, they still remain high. In November 2023, car prices were 23% higher than three years ago at the start of the pandemic, according to Kelley Blue Book.

2022 was a particularly bad year for car buyers, with December 2022 coming in as the most expensive month for new cars. The average cost of a new car was $47,329 at that time, according to J.D. Power’s report. But prices are coming down, albeit slowly. December 2023 saw the average new car price drop to $46,055, down $1,274 from 2022, J.D. Power’s report cites.

Used vehicle prices are also going down, but not quite as drastically as new vehicles. 

"Average used-vehicle prices are forecasted to be $29,413 in December, reflecting a 2.6% or $786 decrease to December 2022," King said. 

Whether you buy new or used, you’ll want to make sure you have the insurance coverage necessary to keep your car — and your wallet — safe. Comparing multiple insurance quotes can potentially save you hundreds of dollars per year. Visit Credible now to compare quotes free of charge.

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New cars tend to have higher insurance rates

While the cost of new cars is dropping, if you choose to buy one, chances are your insurance rates will be higher than if you bought new.

New cars are often more expensive than used vehicles, which means insurers are on the hook for a higher payout should you get into an accident. This leads insurers to charge new car owners higher premiums.

A good driver pays about $141 per month, on average, for insurance on a new car, according to data from The Zebra. Used car owners save on their insurance, paying about $123 for insurance each month. Your exact payment also depends on the brand of your vehicle, mileage and your accident history.

Comparing multiple insurance quotes can potentially save you hundreds of dollars per year. And it’s so easy to get a free quote in minutes through Credible’s partners here.

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