HANDY TIP: Take out a credit card for 12 months or 15 months with 0% period. Using that credit card either pay your whole insurance premium at one go or divide it into 12 installments to pay it annually. You will notice that you will save a lot of money without paying heavy interest charges over the policy period.
Our aim is to save money on our car insurance premium whether we pay monthly or annually. There are certain factors which are out of your hands like the place where you live. A person living in New Jersey will be paying higher amount as compared to someone living in Ohio irrespective of the mode of payment he/she opts for. Having said that, you need to know which will be the best option suiting your needs and situation.
Now the order of choosing the cheapest option is: –
[Full Premium Payment (One ) –> Annual Payment –> Monthly Option]
(Cheapest To Expensive)
It all boils down to one thing, how much you can afford to pay? if you wish to save money on your car insurance premium.
|Insurance Premium Payment||Advantage||Disadvantage|
|Monthly Option||Good for people who plan their budget every month and don’t have much savings in their bank for emergency needs.||Expensive. Normally you would end up paying around 5% more than the annual option. (Note: Some people say that the extra amount you pay is around 25% more, which is wrong)|
|Annual Option||Less Expensive. Good for you if you have the funds and can pay the annual amount to save money on your premium.||You will have to stick to one insurance company for at least a year. So, do your due diligence of researching company credentials before you choose one. Changing might come along with cancellation fees and losses.|
Now Let’s Explore Each Type:
Monthly Payment Of Car Insurance Premium:
- If you ask me, paying your car insurance on a monthly basis is like borrowing money from an insurance company at a much higher inflated rate.
- When you choose the monthly option, it’s like taking a loan equal to the annual amount from the insurance company and paying a huge amount of interest on top of that.
- If you change your car within a year then choosing a monthly mode of payment is a good option. Why? Coz if you buy a new car while you are subscribed to annual mode of payment will attract additional charges to get your new car onto your current auto insurance policy. On the other hand, if you wish to terminate the current policy then you might have to pay the cancellation fees plus some additional months of premium amount. Having a monthly option in this case is a wise decision.
- As premium rates are very dynamic, you will have to pay your monthly premium as per the current month’s rate. This is not the case when you choose annual payment mode. Your rates will remain the same for the entire year until renewal time.
- Another advantage of choosing monthly option is that within the first couple of months you get to know the credibility, customer service, and how the insurance company is doing overall and how helpful they are to you as a customer. If you feel they are not meeting your standards you can switch over. In annual payment mode you will have to stick to one company for at least a year.
Tips To Lower Your Monthly Car Insurance Premium:
- If you have another vehicle in your house, you can check for multi vehicle discounts with the insurance company which can lower your premium by almost 20%.
- Only pay for coverage’s which are actually needed. A well qualified insurance agent can help you in discussion and help you choose the right mix. Unnecessary coverage which might get added to your policy will increase your monthly car insurance premium.
- Check other articles here to get information on how to lower your premium amount.
- If you opt to pay your monthly auto insurance bill by setting up direct debit on your credit card or ETF, you will get certain discount.
Annual Payment Of Car Insurance Premium:
- The biggest advantage of paying your car insurance premium annually is that you will surely get a discounted rate from your insurance provider if you choose this option.
- Do you make enough money to feel comfortable enough to pay for your car insurance premium annually? It will surely save you a lot of money but you should check your budget before choosing this option.
- If you are a “high risk driver” and your insurance premium is high then choosing this option will save you a lot of money.
Purchasing A 6 month Car Insurance Policy, Instead Of Annual Option:
There is another option which might be helpful to you when you want to save money on auto insurance premium. Buying a policy for six months duration. You may find that choosing a semi-annual policy at times may be more affordable than choosing an annual option. Some insurance companies favor semi-annual policies and make it more affordable than annual options.
Keeping all these factors in mind, you need to take your decision accordingly and wisely. No one can say that choosing a monthly option is expensive or annual option is better. It all depends on your priorities, your financial budget and how much premium is being charged to you. A good insurance broker will help you in reducing your cost considerably.