Want $7,700 more to spend on a new car? Move from Michigan to Maine before you insure it.
That's because U.S. insurance premiums on a new vehicle vary wildly by state, according Insure.com, from a high of $206 a month in Michigan to $67 in Maine. All else equal, a buyer can spend $139 a month more for car payments in the Pine Tree State than in the Great Lakes State. That adds up over the life of a loan.
To put this in perspective, let's look at the same buyer in three locations. I'm adding Alabama, where insurance is $110 a month, $1 above the national average.
"Sally" has $3,000 to put down on a five-year loan at 3.07 percent. Her budget is $595 a month for auto loan and insurance combined. So Sally's car-loan max is $528 in Maine, $485 in Alabama, $389 in Michigan. With a five-year note, her shopping budget is $32,300 in Maine, $24,600 in Michigan and $29,900 in Alabama.
What can Sally buy?
I searched dealer inventories on ford.com for vehicles that fit Sally's budget.
At Townsend Ford in Tuscaloosa, Ala., Sally's looking at a Platinum White Taurus SEL, with a 3.5-liter V-6, 18-inch painted wheels and leather seats, listed at $29,745.
At Yankee Ford in South Portland, Maine, there's a Tuxedo Black Taurus SEL, cloth seats but all-wheel drive and 20-inch aluminum wheels, well under budget at $31,470.
But at Dean Sellers Ford in the Detroit suburb of Troy, Sally starts with a silver Fusion SE with a 2.5-liter I-4 and 17-inch painted wheels, listed at $24,555.
Here, insurance premiums are the only variable for Sally. In reality, insurance premiums aren't the same for a Fusion and a Taurus. And Sally might buy something else once on the lot.
But anywhere, insurance costs affect car deals.
How satisfied is Sally with her various auto choices? And would a dealer prefer to sell Sally a $24,600 midsize or a $32,300 loaded large sedan?
You may email Jesse Snyder at [email protected]