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  • Depending on your financial situation, it may make more sense to pay auto insurance premiums in full rather than in monthly installments. But, if you have multiple vehicles on the same policy or you do not have enough money to pay up front, monthly payments are an option. While you may have to pay additional fees each month, you will be able to dedicate money each month to paying the premium and still be able to pay for other expenses.

    Paying Premiums in Full

    Paying your auto insurance premium in full allows you to drive your vehicle for 6, 8 or 12 months (typical lengths for auto insurance policies) without having to worry about making monthly premium payments. Depending on your financial situation, this may be the best option. Some insurance companies offer a small discount to customers who opt to pay their insurance premiums in full when the insurance term begins.

    Installment Fees

    Paying monthly auto insurance premiums can cost a little extra each month (usually between $8 and $10) due to installment fees. While this amount might not seem like much each month, it can add up over time. For example, if you took out two 6-month policies to cover your vehicle for a year with a $10 monthly installment fee, you will end up paying an extra $120 for an entire year of coverage. If you do not have enough to pay the premium in full or you have multiple vehicles on the same policy, paying monthly may be easier financially. Installment fees are listed on your policy and are automatically included in your monthly premium payment amount. If you purchased a new car, your insurance premium will gradually decrease over time as the car depreciates in value. Switching from installment payments to paying in full when it is time to renew your policy is always an option.

    Missed Payments

    Missing a monthly auto insurance premium payment can result in the cancellation of your policy in as little as 5 days. When paying your premium in full, you are guaranteeing that you will have auto insurance for the entire term of your policy. When paying monthly premiums, you are guaranteed auto insurance coverage on a month-to-month basis.

    Automatic Withdrawal

    Most auto insurance companies require automatic withdrawal from your checking each month if you opt to pay your insurance in installments. To make sure you are covered each month, the amount must be in your account by the withdrawal date (same date each month). Depending on your finances, this may be easy or it may be difficult. If you cannot guarantee the payment amount will be in your account each month, consider paying your premium in full at the beginning of the term.

    Source:

    Autos.com: Auto Insurance Payments

    CarsDirect.com: Benefits and Drawbacks of Paying Auto Insurance in Installments

    More Information:

    Edmunds.com: How to Save Money on Car Insurance

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