How young drivers can save on auto insurance for new cars

By Posted : 02/14/2014

Young man driving with young female passengersMany young people not only crave getting behind the wheel as soon as possible, they apparently want to own the car they drive.

That's the upshot of a new report from industry analyst J.D. Power. Consumers age 25 and younger are steadily becoming a greater proportion of total retail vehicle purchasers -- a trend that's been ongoing since 2009, says Jeff Youngs, of J.D. Power's Web marketing group. The findings seem to dispel the common view that novice drivers don't have the means or the interest to make such large buys so early in life, says Arianne Walker, J.D. Power's senior director of automotive media & marketing.

"This age group really is passionate about ownership, their driving experience and the image associated with the vehicle they buy," Walker said in a written statement. "Not only do they enjoy driving, but they also want to personalize their vehicle with options and features, and tend to view it as an extension of their personality."

The "J.D. Power 2014 U.S. Automotive Media and Marketing Report - Winter," based on a survey of nearly 33,000 people who bought cars in 2012 and 2013, makes several points, including:

  • First-time buyers under age 25 are responsible for more than 6 percent of all new-vehicle purchases.
  • The average "lease penetration" among young buyers has increased to 23 percent in 2013, from a low of 13 percent in 2009.
  • The average finance term for the group was 68 months in 2013, about three months longer than the industry average. "Longer terms are an effective tool to allow young buyers to achieve affordable monthly payments despite higher transaction prices," according to the report.

When it comes to motivations for the big buy, and what young drivers feel about that car, the study found that:

  • 33 percent in the 25 and below group say they "completely agree" that their vehicle should stand out from the crowd. Only 20 percent of new-car buyers across all age groups say the same.
  • Nearly twice as many in this group say they "completely agree" that others can tell a lot about them by their vehicle, compared with all new-vehicle drivers (19 percent vs. 10 percent, respectively).
  • Showing "a passion for driving," nearly 22 percent of young drivers say they "completely agree" that they like to drive on challenging roadways with hills and curves, compared to the industry average of 13 percent. Further, 41 percent say they prefer a vehicle with responsive handling and powerful acceleration (industry average of 36 percent).
  • 29 percent in the youth group say they wash and wax their vehicle themselves, which the study says indicates ownership pride. This compares to the industry average of 24 percent.

Easing sticker shock -- at least when it comes to car insurance for young drivers

New cars, even the cheaper ones, are pricey. Figure in your auto insurance and the bill can be daunting, especially for a fledgling driver. But there are ways to trim insurance costs by being smart in choosing a vehicle and taking advantage of various discounts offered by most insurers.

One step to lowering premiums is to raise the deductible from $250 to $500 or $1,000. But, of course, you'll have to pay that higher deductible if your car is damaged.

Lynne McChristian, a spokesperson for the Florida branch of the Insurance Information Institute, has a few other suggestions:

  • Look for vehicles with safety features and good safety ratings. McChristian says your premiums may be lower because insurers reduce their risks when writing policies for safer cars.
  • Be a good student. McChristian says students with at least a "B" average usually qualify for discounts, which can reach 5 or 10 percent.
  • Take a driving course. Young drivers who pass accredited classes can qualify for discounts up to 5 percent. McChristian notes that many insurers accept online courses as well as those in the classroom.

Parents can also lower their premiums if they're insuring a young driver by signing a "parent-teen driving contract" where he or she promises not to drive at night or with friends in the car. Many insurers will give a small discount of less than 5 percent with proof of the contract.

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