New Cars Now Cost Drivers $702 a Month on Average. Here's How to Save on Insurance Costs

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.


  • Limited supply has driven the cost of new vehicles upward.
  • It's important to do what you can to save on car ownership costs, and that means finding the right auto insurance.
  • If you don't drive much and have a strong credit score, you may be able to save money on insuring your new car.

All we can say is "yikes."

If you're in the market for a new vehicle, you may be in for some sticker shock. There's been a massive chip shortage at play for more than a year that's caused automobile production to slow down.

The result? More people want to buy a car than there are cars available. And any time you have this type of mismatch between supply and demand, the cost of whatever you're buying is apt to go up.

It's not shocking, then, to learn that drivers are paying an average of $702 a month these days for a new car, as per Edmunds. That's due to not just higher vehicle prices, but also, higher interest rates on auto loans.

The worst part? Cars could get even more expensive to finance in the coming months as the Federal Reserve continues to move forward with interest rate hikes. And while you may not be able to do much to spend less on a car (since buyers have basically no negotiating power at this point), you can take some steps to spend less money on auto insurance. Here's how.

1. Don't buy the most expensive car

If a car that would normally sell for $32,000 now costs $42,000, that's a situation you may not be able to control. But what you can do is buy a $42,000 vehicle, not a $62,000 vehicle. The less expensive your car is, the less you're likely to pay to insure it, so do your best to stick to the features you need and don't be lured by things like superior audio and high-end seats.

2. Ask for a low mileage discount

Do you work from home on a mostly full-time basis? You might manage to lock in a lower auto insurance rate by virtue of not using your car so much. Ask what discounts you're eligible for based on the low mileage you expect to put in.

3. Shop around with different insurers

Maybe you've used the same company for auto insurance for years. That doesn't mean there isn't a better auto insurance company to work with. Make some calls and compare rates before signing up for insurance. And also, if you have renters or homeowners insurance, see what savings you might reap by bundling your policies. Some insurance companies will give you a discount if you buy both auto and homeowners insurance at the same time.

4. Maintain a good credit score

You'd think auto insurers wouldn't look at your credit score when establishing your premium rates. But alas, they do. And so the better shape your score is in, the more you might save. If your credit score needs some work, you can boost it by paying all incoming bills on time and chipping away at your existing credit card debt.

There's no question that owning a car has become an expensive prospect. But for many people, a car isn't a luxury -- it's something they need to function. And while you may not be able to snag a discount on a car itself, you can do your part to save on the cost of insuring one.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we've researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow