Before consumers trade in their vehicle using the cash-for-clunkers program there are a few items that should be considered, such as what will the costs and savings be and whether cheap car insurance will be found. CheapCarInsurance.org outlines a few items to consider before taking advantage of cash-for-clunkers.

Pheonix, AZ (Vocus) August 12, 2009 -- Before consumers trade in their current vehicle for a more fuel efficient one with the cash-for-clunkers program, there are a few items to be considered to ensure the decision will be beneficial. CheapCarInsurance.org discusses a few points that should be thought about such as what the costs and savings will be and whether cheap car insurance for the new car will be found.

Consider the costs and savings along with purchasing a new car. The first factor to consider is the cost of the new car payment, especially if the current vehicle is paid off. This could be an additional $100 - $300 each month. With a more fuel efficient vehicle, one can expect less money to be spent on gas. In addition, a new vehicle will have a warranty and less maintenance costs. A consumer must ask if these costs and savings will be worth the $3,500 - $4,500 credit.


Another cost will be the likely increase in annual licensing fees and car insurance. As a car depreciates in value, it costs less to insure. A driver will likely find cheaper car insurance premiums with an older, less valuable, car. However, additional safety features and other factors can give drivers of new hybrid cars cheaper car insurance premiums.

Since insurance companies base rates on risk, a safer car will yield cheaper car insurance premiums. Besides the vehicle, the driver plays a role in rates. Statistically, hybrid owners are more mature drivers and responsible citizens with a steady income. These factors show less risk for insurance companies and therefore will offer cheap car insurance rates. Driving records also plays a role. In order to receive cheap car insurance rates, a driver must have a clean record.

Before consumers trade in their current clunker for a new vehicle, they should consider the costs and savings associated with the decision. If the $3,500 - $4,500 credit will offset the costs and the driver is able to find cheap car insurance rates, than it may be a good decision.

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