Car insurance can be paid in two different ways, either all up front or in smaller payments each month. It can be a difficult decision for those who have the choice to make either type of payment. This is because there are certain advantages and disadvantages to both methods and it will depend on the type of car insurance that you have in terms of coverage and overall expense.
Pros & Cons of Paying All At Once
Paying your auto insurance all at once does have some distinct advantages that make it an attractive option. This is particularly true if you have low monthly car insurance that makes paying for it all easier.
Get Insurance Payments Out of the Way: You don’t have to wonder if you paid your car insurance on time if you paid it all at once. It brings you peace of mind knowing that for the term of the insurance it is all paid.
Lower Overall Cost: Unless you have no down payment, it is less expensive to pay for all of the insurance at once than paying every month. Because all of the insurance is paid for, there is no need for a down payment to secure the policy.
Of course, coming up with enough money to pay all at once can be difficult for many people to accomplish, particularly if you are living paycheck to paycheck.
Pros & Cons of Monthly Payments
It’s not surprising that many people pay their car insurance by the month considering that each payment is far lower than paying all at once. Paying by the month is so common that there are people who may be unaware that they can pay all at once.
Read: Frequently Asked Questions about Monthly Car Insurance Policy
Easy to Pay: It’s generally a lot easier to come up with a fraction of the money needed for the insurance rather than having to pay all at once.
Predictable: The insurance is always due on the same day and you can pay it once a month on time which makes it very easy to predict. There are no surprises when it comes to the timing of your insurance payments.
If there is a disadvantage to paying the premium each month, it is that it costs more than if you paid all at once. Paying by the month usually means adding a deposit that raises the overall price of the insurance. However, this particular cost can be circumvented with low or no down payment auto insurance.
Why Choose Monthly Premium Payments?
When you consider the average monthly car insurance cost, it really pays over the long run to go with month to month payments. You keep more money in your pocket which you can use to save up for other expenses.
In the end, paying by the month offers significant advantages for many people, particularly those on a tight budget. Depending on your insurance company, you can have the payment taken out of your account or credit card on a monthly basis which means that you pay on time and eventually may not have to make a down payment in the future.