With the credit crunch affecting every aspect of our financial lifestyle, many will no doubt be looking for ways to cut down on certain aspects.

Whether it involves spending a little bit less on the weekly shop in order to afford to pay off a little more of any loans or credit cards they might have or cutting back on luxury items in order to free up a bit of spare cash.

One of the main financial areas that will be a worry for people during these difficult times is car insurance, with premiums rising all the time as a result of an increase in claims, from accidents to flood damage.

Indeed, a recent survey, conducted by one of the UK’s leading providers, has shown that one in five of us have chosen to downgrade to a smaller vehicle in order to save money on our car insurance quotes and road tax – both of which are seen as some of the main contributors to our personal debt.

Of those surveyed, one in three cited saving money on their car insurance as the main reason for switching to smaller vehicles, other factors that prompted such decisions included saving money on fuel and rising road tax prices.

If you are looking to save money on your premiums, downsizing your vehicle for one that is cheaper to run could be a useful financial decision to consider, as what you save in petrol and car insurance could help free up some extra cash. However, before you make such a decision it is important to do plenty of research.

Firstly, you should work out how much you are spending on the vehicle itself; this can range from the petrol to the general maintenance of the vehicle, bearing in mind that older classes of vehicles are most likely to be more expensive to maintain. After you’ve worked out how much you are spending in petrol, consider whether switching to a smaller vehicle would be beneficial for your daily commute before deciding whether it’s the right step for you.

After deciding on the vehicle it’s time to compare car insurance quotes, and you may be surprised with the results, even if it’s just taking the engine size down by one or two litres, this could prove to make a big difference in the amount you’re spending on fuel, insurance and road tax.


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