Auto Insurance and Clunkers for Cash

Many individuals are thinking about trading in their older cars for new, more fuel efficient cars to earn some extra money through the government’s tax benefit called CARS (Car Allowance Rebate System). Unfortunately, higher auto insurance rates may minimize the benefits of trading in an older car according to an article on insurance.com.

Buying a fuel efficient car is of course beneficial for our environment, but new cars often have higher auto insurance costs because they are pricier to fix and replace. You could end up offsetting the tax savings from the CARS program. One good thing is that fuel efficient cars do cut gas costs weekly right away so there are savings there, but auto insurance rates can cost you more money over time so shopping around is crucial. According to a study from women-drivers.com, only about 22% of drivers shopped for auto insurance before making a purchase of a policy. Auto insurance rates are currently relatively low, so shopping around is a good idea.

The CARS program is still a great initiative towards cleaning up our environment, but it may not benefit everyone. It's always important to do your homework when trading in or buying a new auto.