Paying Car Insurance Premium Monthly or Annually: Pros and Cons
While in certain states auto insurance companies require a full payment at the start of your coverage, in most cases customers are offered payment options where they can pay quarterly, monthly, or even semi-monthly. Just remember – even though you may be paying monthly, the majority of auto insurance companies, usually write their car insurance premium contracts for twelve, six or three month periods of coverage. So, when you pay monthly you are still bound for the duration of the contract, you simply pay more times over the contract's duration.
Also bear in mind, although paying in installments may be appealing because the sums are smaller – you might be paying more in the long run.
Paying Car Insurance Premium Monthly
Quarterly or monthly payments for car insurance are an attractive option for many people on limited budgets because it offers an alternative to paying a large lump sum one or two times per year – instead you split up the cost into more modest monthly payments. For people living financially lean lifestyles, this could be an effective method of making their car insurance premium payments a little more manageable.
High-risk drivers
For people who are classified as high-risk drivers (such as those who have had more than one accident or have been convicted of a DUI), paying monthly might be even more attractive because of high car insurance premium rates.
Convenience
People who like to link their bills to an automatic bill pay from their checking or credit card account, may prefer the monthly payment option simply because of convenience. It also makes budgeting easier because you know that a set amount will be deducted from your account every month at a specific time.
Paying Car Insurance Premium Annually
The convenience and ease of paying smaller sums monthly area appealing enough to some to overlook some of the drawbacks of paying their car insurance premium monthly. But, those who are genuinely concerned about saving money should seriously consider paying their car insurance premium annually.
Fees
Many auto insurance companies in the United States charge a service fee for the convenience of paying your car insurance premium monthly. You may, in fact, be paying up to $60 per year more in extra fees, in addition to your premium, for the simple privilege of monthly billing. Furthermore, you might even be asked to pay a month's payment on top of your premium, which will be held in reserve in case you slip and miss a month.
If you are serious about saving some money and would like to avoid paying service fees such as these, you should definitely consider paying your car insurance premium annually. While saving a lump sum to pay for your total annual car insurance premium may seem difficult, it is worth it if you are saving $50-$60 annually – that can really add up. First calculate how much your annual or biannual car insurance premium would cost and how much money you would have to set aside monthly in order to pay for it at the beginning of the contract. Then consider setting the money aside in small amounts monthly, placing the funds in to a money market or savings account where it will not be easily accessible. Then, when it is time for you to pay your premium, you will have the means to do so.
Consider Shopping Around
If paying annually or biannually is simply not in the realm of possibility for you, then shop around. With the countless auto insurance companies and plans available out there, it is to your advantage to be informed. At CarInsuranceQuotes.com, we compile the rates and premiums of an assortment of auto insurance companies for you so that you can compare them side-by-side and find one in your price-range that will give you the coverage you need. We consider important factors and make sure you are in the loop. We give you quotes for coverage at various levels and compare a variety of companies for you – because we know sometimes price is not the bottom line; customer service and other benefits factor in greatly at the critical moment you need car insurance most. CarInsuranceQuotes.com will help you find a car insurance company and plan that meets the requirements of you and your lifestyle – and we will save you time and money doing it.
