There are so many options (monthly, bi-annually, annually) available for the average consumer when it comes to insurance premiums, car insurance companies, and paying that dreaded bill that has you tied down like a mortgage. The truth is, as long as we drive a registered motor vehicle to get our butts to work, pick up the kiddos, go shopping, and wake up to do it all over again, we need insurance. This sounds like a parody of what life is really like; furthermore, purchasing and registering a vehicle just to drive is like getting bite by a vampire, the blood-thirsty car insurance company.
Car insurance companies are a part of our lives and as long as President Trump keeps denying the allegations of an affair with Stormy Daniels his premiums might remain the same; however, what does that mean for the lives of the average American blue-collared worker, who pays vehicle insurance in order to go to work and pay their taxes?
Money doesn’t grow on trees no matter what Napoleon Hill says, so saving money wherever we can is a vital part of enjoying life for ourselves and for our families.
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Monthly or Yearly, What’s Your Best Bet?
Now that we have your attention, let’s get down to business with some information and statistical data about monthly versus yearly premiums by the state. We’ll discuss the pros and cons that works best for your situation. If you stay with us and finish reading the article, not only will you save money on insurance premiums, you may be rewarded with some more pun along the way.
Pros and Cons for Monthly Premiums
Most car insurance companies rather than forcing you to make a substantial up-front payment will give you the option to make a monthly premium or no down payment coverage. Which one is better? After you carefully review the potential drawbacks versus the advantages in light of your personal situation, then you can make an educated decision. Depending on your need for planning and financial situation, and other core factors, making the wrong choice might have long-term ramifications.
Easier on Your Monthly Budget: Your bills are offset by your income and funds that are left over can be allocated toward investments, entertainment, and maybe a cheeseburger at McDonald’s. Monthly premiums can work seamlessly with your budget and represent an expected outflow that’s already allocated to your financial plan.
Provides More Liquidity: If money is hard to come by, there’s some value with hanging onto your cash for as long as possible. For example, if part of your budget is allocated monthly towards making investments into mutual funds. If you pay a substantial yearly upfront premium for car insurance, there’s a chance you could lose the liquidity needed to to make monthly investments.
Includes Processing Fees: Most car insurance companies will charge a monthly fee to process your payments, these fees are usually small and can be as little as a few dollars a month. Fees over the course of a year can add up to $50 or more depending on your insurance policy, if you value liquidity, shelling out this small fee might mean you can super-size your meal at McDonald’s.
Inconvenience: Paying your car insurance premiums on a monthly basis increases paperwork. From opening letters and statements, then having to file them for future reference is a pain in the butt; furthermore, you’ll have to write a monthly check. If you’re writing monthly checks, Stop! Set yourself up with an automatic payment plan. For example, if your check bounces and you have gone over your overdraft protection? You’re going to get nailed with heavy fees from your bank and extra late fees from your insurance company on top of your monthly premium.
Pros and Cons for Yearly or Annually Premiums
One of the biggest reasons to opt for a yearly premium is not missing a payment and getting charged with late fees. Once your yearly policy is active, you can drive on that until it expires or the wheels fall off. In some cases, if you’re one day late on a monthly premium payment, some insurance providers can charge you a fee for re-joining, deny new coverage or drop you. Paying yearly premiums will lessen the chance of this happening and save you money in the long run.
Less Paperwork: Paying a yearly premium means no more monthly bills in the mailbox. This helps to avoid the annoying phone calls from debt collectors that you can’t block unless you want to drive without insurance?
Bigger Discounts: Some car insurance companies will offer a huge discount for annual up-front payments because they get your cash quickly and it benefits them financially. Ask your insurance representative how to get the money you deserve for paying a yearly premium. Some reps are slick and try to put it in their pockets, avoid that by asking up-front.
Huge Chunks: An annual up-front payment can take a huge chunk out of your bank account. Some families who live paycheck to paycheck, may not be able to afford such a huge chunk and have no choice, but to opt for a monthly premium.
Less Flexibility: Something all drivers should know is that car insurance payments can go down or up according to many factors. By having a short-term policy allows drivers to see what they’re paying for, and spot higher charges earlier.
Average Monthly and Yearly Insurance Rates by State (updated 2018)
|State||Avg. Monthly Premium||Avg. Yearly Premium|
|New Hampshire (NH)||$82||$983|
|New Jersey (NJ)||$159||$1,905|
|New Mexico (NM)||$114||$1,371|
|New York (NY)||$98||$1,173|
|North Carolina (NC)||$88||$1,060|
|North Dakota (ND)||$143||$1,710|
|Rhode Island (RI)||$168||$2,020|
|South Carolina (SC)||$110||$1,316|
|South Dakota (SD)||$130||$1,557|
|West Virginia (WV)||$210||$2,518|
Note: This is just an average number which is of course very unstable as car insurance rate depends on various factors. In order to learn your rate for today, click here to get quotes and compare.
Choosing the Right Payment Schedule
You are the only one who can decide whether a monthly or yearly car insurance payment schedule is right for your situation. Use the information in this guide and review your monthly budget. Figure out the value you place on liquidity and factor in that a monthly premium will leave the door open for switching insurance carriers in the event you find a better rate with another insurance company.
Saving money is the goal and if you save enough money, you can skip McDonald’s altogether and head straight for the never-ending salad bowl at the Olive Garden.