Cheap Auto Insurance: 29 Dollar Monthly Plans

Getting auto insurance for $29 a month is possible, but it depends on a lot of factors. The national average cost for state minimum liability insurance is $42 per month, and it's hard to get coverage for around $1 a day. However, by lowering your risk profile, you can qualify for car insurance under $50 a month. This includes having a good driving record, being a safe driver, and having a good credit score. Additionally, the type of vehicle you drive, where you live, and your age can also impact your insurance rates. Comparing quotes from multiple insurance companies and taking advantage of discounts can also help you get cheaper rates.

Live in a state with lower insurance rates

The state in which you live can have a significant impact on your auto insurance rates. The difference in car insurance costs from state to state can amount to hundreds of dollars per year.

For example, Maine has the lowest auto insurance rates in the US, with an average annual rate of $949, which is $594 less than the national average of $1,543. Idaho is the next cheapest at $992 annually.

On the other hand, drivers in Louisiana, which has the highest sample rate, pay a state average of $2,734 annually for car insurance. That’s almost three times the average in Maine.

Other states with low insurance rates include:

• Vermont: $1,539 per year
• Hawaii: $1,581 per year
• Ohio: $1,660 per year
• Wisconsin: $1,773 per year
• North Carolina: $2,040 per year
• Indiana: $1,190 per year
• Iowa: $1,215 per year
• Tennessee: $1,264 per year
• New Hampshire: $975 per year

If you live in one of these states, or are considering moving to one, you may be able to benefit from lower insurance rates.

Drive a car that's cheap to insure

One of the most important factors in getting cheap car insurance is the type of car you drive. While it may seem obvious, many people don't realise how much the type of vehicle they drive determines insurance rates.

SUVs and trucks are cheaper to insure, on average, compared to sedans. This is because they are larger and heavier, and therefore more capable of causing damage on the road, leading to a higher premium. However, SUVs are often driven more carefully because they carry children and family members, and they have enhanced safety features like side curtain airbags.

When it comes to specific makes and models, the Subaru Outback is the cheapest vehicle to insure, with an average annual premium of $1,603 per year, 25% lower than the national average of $2,014 per year. Other cheap cars to insure include the Honda Pilot, Ford Escape, Honda Odyssey, Jeep Wrangler, GMC Sierra 1500, Toyota RAV4, and Nissan Rogue.

In contrast, some vehicles are more expensive to insure. This includes the Honda Civic and Accord, which are frequently stolen, and the Dodge Charger, which is the most expensive vehicle to insure out of 27 vehicles assessed, with an average premium of $2,824 per year for full coverage.

Luxury vehicles and sports cars are also more expensive to insure due to their high repair costs and the prevalence of auto theft. Electric vehicles (EVs) are also more costly to insure because their batteries are expensive to repair or replace.

Raise your credit score

While it's difficult to obtain car insurance for $29 a month, it's not impossible. One of the factors that influence this is your credit score. Here are some ways to raise your credit score:

Make On-Time Payments

Making timely payments is the most important factor in improving your credit score. Your debt payment history accounts for 35% of your FICO score, and late or missed payments can remain on your credit report for up to seven years. Set up autopay or calendar reminders to ensure you never miss a payment due date.

Pay Down Revolving Account Balances

The amount you owe makes up 30% of your FICO score. Aim to keep your credit utilisation as low as possible, ideally below 30%. If you have high credit card balances, make paying them off a priority. Consider strategies such as debt consolidation loans or balance transfer credit cards.

Don't Close Your Oldest Account

The length of your credit history accounts for 15% of your FICO score. Avoid closing your oldest credit card account, even if you no longer use it. Consider using it occasionally or putting a small recurring bill on autopay to keep it active.

Diversify the Types of Credit You Have

Your credit mix accounts for 10% of your FICO score. Lenders like to see a variety of credit types, such as credit cards, auto loans, and mortgages. If you only have one type of credit account, consider applying for a different type to improve your credit mix.

Limit New Credit Applications

Each time you apply for new credit, a hard inquiry is made on your credit report, which can knock a few points off your score. Only apply for new credit when necessary, and consider checking if the lender offers prequalification, which uses a soft credit check that won't impact your score.

Dispute Inaccurate Information on Your Credit Report

Inaccurate information on your credit report can significantly impact your score. Obtain free copies of your credit reports from Equifax, Experian, and TransUnion, and dispute any errors or fraudulent activity you find.

Become an Authorized User

If you're new to credit or have a thin credit file, consider asking a relative or friend with a good credit history to add you as an authorised user on their credit card. This can have an immediate positive impact on your score, especially if the account has a high credit limit and a history of on-time payments.

Eliminate unneeded coverage

Eliminating unneeded coverage is a great way to save money on your car insurance. If you have an older car, you may not need comprehensive and collision coverage. If your car is worth less than $4,000, you probably don't need collision and comprehensive insurance coverage. These coverage options, also known as physical coverage, are designed to protect your vehicle. But if your vehicle isn't worth much, you might be paying for auto insurance coverage you don't need.

You can also reduce your coverage to the minimum car insurance requirements. Almost every state requires liability insurance, and others mandate uninsured/underinsured motorist coverage, personal injury protection and/or medical payments coverage.

If you have a car loan, your lender will require you to keep full coverage to protect their investment in the vehicle.

Raise your deductible

Raising your deductible is one way to lower your auto insurance premium. The deductible is the amount you pay out of pocket before your insurance coverage kicks in. Typically, you can choose a deductible of $250, $500, or $1,000, but amounts can go as high as $2,500.

Raising your deductible can save you between 7% and 28% a year on average. For example, increasing your deductible from $500 to $1,000 may lower your car insurance rate by 10%, resulting in average savings of approximately $188 per year. However, this depends on various factors, including your carrier, location, and driving record.

Before raising your deductible, consider whether you can afford the new, higher deductible amount. If you have a stable financial situation and a good driving record, you may be a good candidate for a higher deductible. Additionally, make sure you have enough money in savings to cover the higher deductible in case of an accident or claim.

It's also important to note that raising your deductible may not be a good idea if you drive frequently, drive in high-risk areas, or own a less valuable car. In these cases, you may prefer a lower deductible to have more predictable costs.

Finally, keep in mind that while raising your deductible can lower your premium, it's not the only way to save on auto insurance. Other ways to save include shopping around for quotes, bundling insurance policies, and looking for discounts.

Frequently asked questions