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Have cash, will travel

August 09, 2005|by ROSEMARY IVOSEVICH

There are a number of costs that go into car ownership. You have to think about how much you want to spend on the car itself, insurance, gas and repairs. All of these things add up quickly and can become very expensive.

I've recently had to start paying for gas, on top of half my insurance and I didn't realize how much of my paycheck went into operating my vehicle.

I've been driving for a little over a year, and I didn't have to pay a penny until I totaled my first car. After the accident, my insurance skyrocketed. I then began paying my insurance company $160 a month.

I decided to phone a few friends who have been driving for at least a year. I asked them how much they think they pay yearly for their car.

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"I don't want to think about it," Adam Gettle, 19, of Chambersburg, Pa., said, with a laugh. He told me he spends about $40 a week in gas alone. So that's $2,080 a year in gas alone. (Now I know where all my money goes.)

Kathy Caudill, 18, of Boonsboro, said she pays approximately $1,500 a year for insurance; she's been involved in a few collisions. Kathy pays somewhere between $60 and $70 monthly to fill her 2000 Mazda Proteg with fuel. She says she is still making car payments of $76 a month. Altogether, she pays about $3,200 a year.

Justin Bean, 18, of Greencastle, Pa., works as an insurance agent for Bitner-Henry Insurance in Hagerstown. I asked him why he thought insurance is so expensive for teens. He said that it depends on the kind of car a person drives.

"The whole purpose of insurance is to restore someone to the same financial status they were at before the accident," he said.

Consider these factors:

  • How cheap is it? A more expensive car costs more to repair or replace.

  • New or used? A used vehicle isn't worth as much as a new vehicle and you will only be paying for any physical damage.

  • Does it have a performance package or a powerful engine? Basic vehicles with standard engines are cheaper to insure.

  • Age of the driver. Teenage drivers are involved in more collisions than older drivers, and so cost more to insure.

  • What kind of coverage is needed? The State of Maryland requires all drivers to have liability insurance, which pays for damages to other vehicles if a driver is at fault in a collision.


Another factor in insurance is whether you took out a loan to buy your car. Banks will require full insurance coverage so that, in case a person's car is vandalized, damaged or totaled, the bank will still get repaid its loan.

All of these factors must be considered before determining the cost of insurance.

One way to lower insurance costs is be covered by a parents' policy. If a teenager has an insurance plan under their parents or guardians, it will be cheaper than a teen having their own plan.

Gender is also a factor, Justin said.

"Males are usually more expensive because they tend to show off more and can be more irresponsible," he said.

He added that this traditional stereotype is not absolute. Some girls pay as much insurance as boys.

Justin said that insurance is more expensive for teen drivers because most teens don't have a lot of driving experience. Therefore, teens are at greater risk to cause accidents. Insurance is expensive to provide a recoup for any losses.

If teens are involved in a crash, their insurance will increase. How much? This depends primarily on how severe the accident is, and who is at fault, Justin said.

Insurance plays a big part in the yearly cost of operating a car. But because of the many different factors that go into an individual's insurance, there is not a universal price for insurance costs. A rough estimate for a new driver under their parents' policy, will be about $600 to $900 annually, according to several agencies with whom I spoke. Teens should get a good many quotes before settling with a policy.

Owning a car can be pricy. Some things you can't control, like the price of gas. But by buying a basic vehicle and driving carefully, you can keep down variable costs like insurance.

And that makes cents.

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