Why is the price of the car important when buying and insuring?
Below are a few things that you should know before making a financial decision that you will not regret in the future. The most important of which is preparing the budget for buying a new car and understanding the vehicle’s market value and its impact on car insurance prices later.
How can you buy a car within a budget?
According to the “Nerd Walt” and “Money Advice” organizations that specialize in financial advice, shopping becomes a bad habit when the individual does not take into account some considerations that consume his savings and contribute to increasing the costs incurred. This is why people should act according to a written budget when buying cars – and simply your budget can lead you to the right car using the 4/20/10 rule.
What is the base 20 4 10?
The 4/20/10 rule is a rule of thumb using simple math that shows a sound way to budget without financial stress. Get your calculator ready and let’s get started with the app!
To budget for your next car purchase, you need to be able to:
- Paying a down payment of 20% of the car value
- Installment of the car amount over a period of 4 years (48 months) or less
- Otherwise, your total car expenses, such as maintenance and car insurance, exceed 10% of your monthly income.
To make it easier for you to apply the rule, have a clear picture of car prices and car insurance rates and you can easily get this information from the Internet and car insurance rate comparison sites.
Do car insurance companies pay much attention to the price of the car?
Interestingly, car insurance companies also care about the price you might pay for the car! When you go to buy a comprehensive car insurance policy, insurance companies ask you to mention the estimated value of the vehicle, because it is one of the factors that are taken into account in determining the price of car insurance.
In addition, the insurance companies inquire about some other information such as the age of the driver, the number of previous violations, and the make and model of the car.
Why is the insurance company asking for the estimated value of my car?
Car insurance companies pay special attention to the price of the car – or the estimated value of your car – for several reasons, which are:
- Estimating car repair costs
- Estimating spare parts prices
- Calculate the compensation costs that must be paid when calculating the vehicle in the event of a total loss.
Often, the lower the appraisal value of the car, the lower the insurance rates will be – with exceptions to this rule. So if you are trying to save on car insurance, be sure to follow the advice of insurance experts and inquire about car insurance rates in advance.
How do I determine the estimated value of the vehicle upon insurance?
Estimated vehicle value is the estimated market value of the car when the car is sold and is a value that the car owner determines themselves — it’s like putting a realistic price on a used car before trying to sell it. Of course, the estimated value of the vehicle varies according to the type of vehicle, whether new or used, the number of kilometers traveled and the condition of the vehicle. That is, if it was subjected to any damage or accidents in the past.
Let us show you several methods that will help car owners determine a more accurate value for it.
Tips for pricing the car and determining the correct estimated value
You can browse car pricing websites or used car sales pages in Saudi Arabia to determine the price of cars similar to yours, and make comparisons with them to determine a more accurate price.
You can also evaluate the price of the used car according to the percentage of consumption. For example, you can deduct 10% of the original car price for each year of the car’s life.
The car owner must also take into account the actual condition of his car when trying to price it. If the car had been in an accident in the past, he should reduce the price suggested by the websites because it determines the assumed price for cars in excellent condition.
The value of the used car that was involved in an accident can be known from the estimates of the sheikh of exhibitions.
Is it better to reduce or increase the estimated value of the vehicle?
Reducing the estimated value of the vehicle means lower insurance rates, and it may also mean obtaining a lower amount of compensation in the event that the car is considered damaged (total loss) due to an accident or car theft.
An increase in the estimated value will lead to an increase in the insurance prices, and in the event of a total loss, the insurance company has the right to compensate the insured with the estimated value of the vehicle or the market value, whichever is less, unless the insurance contract stipulates otherwise.
In order to preserve your insurance rights, SAMA advises insurance clients to:
Inform the company of the real estimated value of your vehicle when insuring, and at every renewal of the insurance policy without any increase or decrease, because the insurance policy is a compensation document and not an enrichment one.
In answer to the question, What are the matters that should be paid attention to when purchasing a comprehensive vehicle insurance policy?
To keep your money and your most valuable possessions
If you decide to invest in your car, it is important that you maintain its value throughout its lifetime. This is why we always recommend getting comprehensive insurance for new and expensive cars.
- Here are some things you can do to preserve the value of your car
- Commitment to regular maintenance of the car
- Maintaining the car in perfect condition without accidents or scratches
- Vehicle popularity and market supply and demand situation.
The factors that may lead to the rapid loss of the value of your car are:
- wear and tear (depreciation)
- Mileage traveled
- Vehicle modifications
- Number of previous owners
- The number of accidents