When it comes to buying a first car, most people research various models and prices, figure out which cars fit their budget and then take a few for a test drive. After some negotiating, you may think you're ready to roll off the lot, but before you lock in your purchase you should look into the insurance rates.

Required to drive your new car off the lot
If you don't have insurance in place when you go buy your car, the dealer won't let you drive the car off the lot, according to esurance. In addition, if you're going to finance your vehicle purchase, your bank is going to want to make sure that you're fully insured. If you're not financing your car and you already have insurance, you may be able to buy a new car and then update your policy. Your existing policy must have a clause in the terms allowing you a window to report a new vehicle purchase. Your old terms will probably apply, and you might prefer to increase your coverage limits for your new car. If you're financing through the dealership the dealer might still make you wait until the car is clearly added to your policy rather than relying on the grace period to protect its loan.

Determining necessary coverage
Before you buy your first car determine the level of coverage that you need to protect your purchase. If you're paying cash for an old car, you might be content with a high deductible and limited comprehensive and collision insurance coverage. However, if financing your first car purchase your lender will likely insist on low deductibles and full coverage, because the lender wants to make sure it's covered if something happens. Those extra bells and whistles on your policy can make it more costly.

Budgeting for costs
Before you a buy a car you probably ran the numbers to make sure that the monthly loan payment fits in your budget. However, you really need to account for the true cost of car ownership, which includes the cost of insurance.

Depending on the type of car you're buying and your driving history, your insurance bill could break your budget. If you know in advance how much insurance is going to add to the cost of ownership you can negotiate the purchase price to make sure you don't go over budget. For example, you know you can afford $450 in monthly payments for your car. If you settle on a price with the dealer that will cost you $400 a month in loan payments, but then you realize insurance costs you $100 a month, you're quickly over budget. If you know insurance is going to set you back $100 a month you know you have to negotiate a price - or find a less expensive vehicle - that requires $350 or less in monthly payments.

Shopping around
Checking insurance costs before you reach a deal with the dealership gives you time to shop around with different insurance companies, making sure you get the best policy for your situation. Of course, everyone loves a low price, but you also need to consider the value that the insurance policy gives you. For example, you might be able to save a few bucks if you raise your deductible, but you have to determine if you could afford the extra cost if you are in an accident. Some policies offer accident forgiveness, so your rates won't increase if you're in one crash. If you're buying a new car, a policy that offers a new car replacement feature might be of particular interest because of how quickly a new car will depreciate.

Checking for discounts
Different insurance companies offer varying discounts, savings you may have to do a little digging to qualify for, and that you might not have the time to verify if you're in a rush to obtain coverage after you've reached a deal. For example, some companies offer a discount for applying online. If you're at the dealership and you instead call an agent you likely wouldn't qualify for the online discount. Or, if you have good grades you could pay a reduced premium. Additionally, some policies offer discounts for safety features on the car. If you're deciding between two cars and one has those features but is slightly more expensive, the insurance discount might offset the cost of those options.

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