Once upon a time, the only way you could purchase Car Insurance was to pay for it six months or a year in advance. This required some forethought and budgeting for drivers. Saving enough money to foot the bill for that annual or semi-annual payment could be difficult for many people. As more states began requiring Car Insurance, insurers slowly began making the payment process more convenient for drivers. They started offering policies with monthly payment options. Today, it’s more common to submit a payment each month for your Auto Insurance than it is to pay semi-annually or annually.
However, insurers still prefer that you make a semi-annual or annual payment on your Car Insurance. Why? Because it ensures that you’ll be a customer for at least that long. In fact, Auto Insurance carriers now offer significant discounts to drivers who choose to make one or two payments each year instead of a monthly payment. Now, it’s up to you to decide if these discounts are worth the financial inconvenience.
How Much Can You Save on Car Insurance?
Typical of many other factors, the discount you receive on your Car Insurance premium varies significantly from carrier to carrier. Not all carriers offer the same discounts. Some Auto Insurance companies may charge a fee of a few dollars on each monthly payment. That can add up over time. Therefore, you might choose to make a semi-annual or annual payment to avoid those small fees. Also, some companies may offer you a discount anywhere from 5% to 20% off if you make an annual payment. That’s another incentive to choose an annual payment for your Car Insurance rather than smaller monthly payments.
Pros of Annual Payments
There are other advantages to paying your premium annually. For instance, it buys you a year’s worth of financial protection and peace of mind. You won’t have to worry about making a monthly payment on time or paying late fees if you do miss a due date. It also helps you avoid your policy from being cancelled altogether in the event you can’t make a monthly payment. This option may be preferred by drivers who struggle making monthly payments. In addition, it allows you to pay your entire year’s premium after you get a substantial influx of cash, like many seasonal employees or retirees who receive quarterly disbursements from investment accounts do.
Pros of Monthly Payments
The benefits of monthly payments on Car Insurance are obvious for some drivers. Monthly payments eliminate the practice of saving up enough money over the course of a year to afford one large lump sum of cash for one or two payments. Dropping that amount of money at once can be detrimental to a family’ finances. In fact, it can be detrimental to anyone who’s living on a budget. For people living paycheck to paycheck or who don’t have a savings account, monthly Auto Insurance payments may be the only affordable option.
Are Monthly or Yearly Payments Better?
So, which Car Insurance payment method is right for you? Obviously, it depends largely on your financial situation and comfort level. Another determinant is the amount of savings you’ll reap if you do make a lump sum payment. For example, it may not be worth it if you only save $30 a year in payment fees. On the other hand, maybe you could save $300 or more by making an annual payment. Then, if it’s within your budget, making that large one-time payment can definitely be worth it. If you have the fiscal flexibility to pay for a year of coverage, it doesn’t hurt to look into how much money you could be saving on your Car Insurance.
Speak with an Auto Insurance Specialist
Once you decide which payment method works for you, see which Auto Insurance company offers the biggest discount for your choice. This may determine which insurer you give your business to. The best way to compare multiple top companies and low rates at once is to call an Auto Insurance Specialist at (855) 919-4247. Our agents can provide you with a Car Insurance quote from several trustworthy companies that offer a range of discounts. If you’re still uncertain about which payment method saves you the most money, our agents will be happy to help you figure that out, too.
This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverage’s in a given policy may be different than those suggested here. Such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.