Besides the purchase price of a car, one must also calculate the potential maintenance cost, and auto insurance cost to determine affordability. We often focus on the first two costs, but seldom do we realize the auto insurance cost differential until we’ve purchased the car!
Back in 2012, I was so happy to negotiate $2,000 off the initial asking price of a $14,000, black on black, BBS wheels equipped 1997 M3 in 2003 that I didn’t realize my auto insurance would jump from just $500 a year to $2,000 a year!
Had I realized my auto insurance would jump so much, I probably would have negotiated even harder, or reconsidered buying a sports car altogether.
Always get an auto insurance quote before you purchase a car please! If you really want to feel good affording a car, follow my 1/10th rule for car buying that states that you shouldn’t spend more than 10% of your annual gross income on the purchase price of a car.
Having auto insurance is a law you don’t want to break. Accidents happen all the time whether they are your fault or not. If you end up wrecking someone else’s car and injuring a passenger, not having any car insurance could literally wipe you out financially and put you in poverty for the rest of your life!
Check for a better auto insurance quote via Esurance online. They provide comparison quotes so you know you’re getting a great deal.