Wednesday, March 4, 2009
Category:
Personal Finance Tips
According to car insurer LV=, 19 percent of drivers have downsized or sold one of their cars as a result of the credit crunch.
61 percent revealed that the main reason for having done so during the course of the past 18 months was due to the cost of fuel. Some intended to cut the cost of road tax.
Of those that downsized their cars, one in five estimated that they already enjoyed an average saving of £309.
As the Government promotes ‘greener’ driving, it comes as surprising news that just 15 percent of the drivers that downsized their vehicles had considered environmental factors when taking the decision.
As a result of the increased number of UK motorists downsizing, or making second-hand purchases, new car sales have plummeted by a third over the past 12 months. In November 2008, 600 fewer vehicles a week were being registered, which has left the Government considering extending their state aid to the motor industry.
With 23 percent of the survey respondents admitting that they would consider investing in a second hand car in order to reduce their insurance premiums, analysts at LV= have offered the following advice:
- Look to purchase a common make of car as these tend to be cheaper to repair if needs be.
- Opt for a car with a smaller engine as the insurance should not be as expensive as it would otherwise be.
- Try to steer clear of buying a car that has been subject to engine or bodywork modifications as the insurance for such vehicles could be more costly.
- Avoid purchasing an imported vehicle as these vehicles can cost more to insure.
LV= have also made recommendations for obtaining the best value insurance:
- Instead of simply renewing an existing policy, look into other options as cheaper alternatives may be available elsewhere.
- If you lock your car away at night, inform your insurer as this could entitle you to a reduced premium.
- Also inform your insurer that your annual mileage is low if this is the case, as this too could mean a less expensive premium.
- Ensure that your class of cover is suitable and that you are not paying for elements such as business or commuting use if this is not the case.
John O'Roarke, Managing Director of LV= Car Insurance, commented: "Buying a car is often the second biggest purchase people make after their house. So it's only natural that in the current economic downturn, when people are being more careful with their money, they also look to save on their motoring costs.
"This is undoubtedly a smart move, as the credit crunch looks set to bite deeper. By following the guidelines above, motorists downsizing should be able make significant savings every year without having to consider getting rid of their car altogether."
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Those that are lacking the funds required to purchase that much desired vehicle, whether it be new or second hand, may wish to consider taking out a
secured loan to cover the cost. Available to homeowners over a term from 5 to 25 years, this option could also be used to consolidate existing debts at the same time. Such debts may include credit and store cards that have been relied upon in an effort to get through the credit crunch. A secured debt consolidation loan would result in just one, potentially lower, monthly repayment as opposed to juggling several, expensive and confusing repayments. However, it must be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
