What Are My Payment Options for Auto Insurance?
Each insurance company has specific options for making payments, whether it’s with a six-month policy or a one-year policy. It used to be that you could only buy car insurance if you had the money to buy it all upfront for a year, sometimes six month. Now, it’s become quite common to be given more choices about the payment breakdown. Sometimes, you have the option of making nine or even up to 12 monthly payments, called premiums. Some insurers ask for an upfront payment and then monthly installments for the balance while others break down the year’s coverage into even monthly payments, tacking on an installment fee each month. Whereas it used to be the norm to pay for a length of time upfront, it’s more common for people today to pay for their car insurance monthly. However, because it’s financially advantageous for the insurer to receive full payment at the start of the policy, there is usually a discount for clients who can and want to pay for the full year or semi-annually. Discounts differ for each insurer and each driver, so it’s important for you to discuss your options with a trusted car insurance agent. If you do not have someone you can call to inquire about your options or if you want cheap car insurance quotes, visit SmartFinancial and begin a quote to be put in touch with one of our trusted agents.
Here are the most common car insurance payment options available on the market today.
One or Two Payments
There is usually no service fee if you make one or two payments for a six month insurance policy or a one year car insurance policy. However, you will be charged a fee if you are billed for installments of 9 months or 12 months a year. If you are able to pay the whole amount in one or two payments make sure you get the discount that almost always accompanies what is really a guarantee that you will not change insurers.
What’s also good about paying your car insurance in full is that you don’t have to worry about making payments all year long! You won’t get a late fine for forgetting, and you won’t have to worry about your insurance being discontinued because it’s paid for and set. The only downside of buying insurance this way is if you decide to switch. By law, your insurance company has to prorate your payment but it’s a hassle and may take some time for the partial refund. This is why it’s good to make sure you have the best auto insurance for the lowest rate by comparing car insurance quotes with SmartFinancial. Also, if you don’t have a lump sum in your possession you may have no choice but to make the more expensive monthly payments.
For many drivers, monthly payments for car insurance are the only affordable option. It’s difficult for some people to wait until they have a huge lump sum for a year’s worth of insurance. It can be very draining on one’s financial situation, too, especially for people just making ends meet. Some carriers will still give you a discount if you do auto-pay.
There are other reasons you may want to make monthly payments as opposed to paying in full upfront. It could be that you want to use what you’d pay upfront on other investments or other large expenses.
Basically, when it comes down to it, you save more money overall if you pay for a year’s worth of car insurance in full but this scenario may just not be possible because your income doesn’t allow you to easily save the balance.
How Much Are Monthly Installation Charges on Car Insurance Premiums?
This is the smartest question to ask yourself before you jump the gun and arrange a payment plan that doesn’t suit you. If your annual installation charge is $20 a year, it may be well worth the cost of having to pay $1000 or more upfront for your auto insurance. However, if your annual installation fee is $200-$300 (even more), then that is a real expense and you should find other discounts if you can’t pay your car insurance in full. See below.
Other Considerations on Paying Car Insurance Annually vs Monthly
You may earn a discount if you set up your account so you can make electronic payments. This will not just save you money, but you will never miss a payment. The only thing you have to worry about is making sure you carry a big enough balance to cover the charge. Chances are that if you opt for an electric monthly payment, that will offset the installation charges or service charges for paying monthly as opposed to bulk.
It’s good to know you have options so you can continue driving without any problems. Whatever you do, do not drive unless your car is insured. Otherwise, it may become even more expensive when you try to buy coverage. Regardless of which way works better for you, get free car insurance quotes before you renew!
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