Payment options for cheap car insurance

Car Insurance Modes of Payment

In today’s economy, cheap car insurance is sought after by everyone. An important consideration in this search is the method of payments. Auto insurance companies generally prefer upfront annual payments as this means less risk for them. Monthly and quarterly payment options are available, but there are a few things to consider before you make your choice.

Cheap Monthly Payments - A Myth

People prefer making monthly car insurance payments because the smaller amount seems more affordable. When you consider the convenience surcharge added to your payment every month, the total amount turns out to be higher than an annual payment.

Moreover, most companies that allow customers to pay on a monthly basis require a down payment..

Penalties and Late Fees

While monthly or quarterly payment options may be convenient, missing a payment will result in penalties and late fees. Some companies go as far as charging an extra monthly premium as a late fee. Setting up an automatic billing system will keep you from being late and will save you money in the long run.

Missing Out on Discounts

When you choose to make an annual payment, you generally get a discount. Customers who pay on a monthly basis are not eligible for this lowered rate.

Depending on your insurance provider, you may get a discount if you sign up for an automatic payment system that sends out your monthly bill payments the days they are due.

When to Pay Monthly

If you have a small budget, you need cheap car insurance premiums. When you cannot afford a large annual payment, monthly or quarterly payments are better options for you.

Insurance seekers who are deemed high-risk customers prefer this mode of payment since  an annual payment may be too large to pay all at once.