Paying your auto insurance on a monthly basis can seem a lot easier to manage than paying in full. With money tight in so many areas of life these days, an annual premium on your auto insurance can seem daunting. However, it may save you more money in the long run. Most insurance companies give you the option to pay your premium on a monthly basis, or in full once a year.
How do you know which is the best option for you? We’re here to help you choose the best payment plan for your circumstance.
For those who can’t afford paying an annual payment, many companies will let you pay on a monthly basis for your car insurance. Instead of paying all up front, your payment will get divided by 12, and that is your monthly dues. However, most companies charge an installment fee for this convenience since it takes more work on the company’s part to process 12 payments instead of just one.
Since many people budget on a monthly basis, this may be a better option for some, even with the installment fee.
Paying annually is almost alway the least expensive way to pay. Also, many companies will give you a “pay-in-full” discount when you pay at the beginning of your plan. The convenience of paying in full is you don’t have to worry about monthly payments every month. With annual payments, it is a one time payment for 12 months and you won’t have to worry about you next payment for awhile. It can “take the load off”, so to say.
If you are usually late on your payments, paying in full can also help you avoid late fees that are associated with not making your monthly payment on time. Not only that, but if you have too many late fees, your coverage can be cancelled by the insurance company. Paying in full avoids that issue.
It really comes down to your financial situation and what you are comfortable with. For those that have a more steady financial situation, monthly premiums work well. For those that want to get the payment out of the way for 12 months, pay in full might be the best option.
If you want to know how much you could be saving on annual payments, talk to your insurance provider and see what discounts they offer. After you find out how much of a discount your provider is able to give you, compare quotes with other businesses. Some insurers may give better discount for “pay in full”, while others may not be worth the savings.
It may come down to a savings of $30/year to pay your monthly premium, versus saving $200/year – in that case, you would want to consider switching providers.
Keep in mind, you can get discounts in other ways, too. Many providers will give you a discount for electronic payments and automatic payments. Below you can get an insurance quote to see if you’re getting the best price for what you’re paying (and how you’re paying).