Auto insurance premiums are large expenditure for most people. Many people are prepared to go without insurance because they just cannot afford to pay the costs. For those people our title may not make any sense or even anger them. On the other hand, many people have the option to get credit from auto insurers or from credit card companies.
What Are Car Insurance Premium Payment Options
Most companies are flexible enough to cater for variety of payment needs. However, the way they do and additional charges they apply differ considerably. For example, some insurance companies get their money upfront whichever way you pay the premium. You would ask how it would be possible when you are paying the premiums monthly.
What they do is to set up a loan agreement for you with a finance company. You pay the premiums and interest to this company and in return this company pays your insurer the full premium. Should you cancel the policy or payment option they let the insurer now. Then, the insurer cancels your policy and pays the company back whatever is due. As a result you may be paying interests and loan set up fees within your monthly payments.
This does not mean that there aren’t companies who are happy to let their customer to spread the premium over a longer period of time. You just have to check the payment options and the additional charges if it is important to you and you can only make the payments on monthly basis. A cheaper quote may end up more expensive once you add the finance costs of monthly payments.
Monthly Payments allow policyholders spread the costs over a longer period with equal payments. Usually, automatic payments set with the bank and money is collected at specified day of each month. As long as you keep enough money in the bank you should be alright with this arrangement. Of course you need to check the additional costs for this service. Also, most companies would carry out a credit check on you to make sure you will not miss payments. If your credit score is low you may not be able get this option with many companies.
Shorter Instalments may be available with some companies. Not every company allows instalments over 10 months or longer. They may allow five instalments at no or lower costs. This option may suit you as you get your instalments and not get charged much. Besides all you may need is just few months to pay for the premium.
Upfront Annual Payment is an option that has the least complications and most preferred by insurers. They get their money right away and this reduces the chances of policies being cancelled half way through due to no payment or switching to cheaper insurers. If you are only monthly payment it is easier to switch since you have not paid the whole premium and all you need to do (in most cases) is to cancel the payment through your bank.
Companies like this full upfront payment option so much that they are willing to offer around five percent discounts to persuade policyholders. However, they may not offer this discount automatically if you are ready to pay the premium in full before they even ask. It is always worth checking if you would get discounts for paying now and in full.
Even you do not get the discounts by avoiding the interest charges on monthly payments you may save money. Remember that every company is different and you should check the options available through your preferred provider.