Monthly Vs. Annual Car Insurance Premiums: Which Is Best For You
There are quite a few things to consider when buying a new car insurance policy. These include how much coverage to get, which company to use, and the various terms you want involved on your policy. However, another big concern is whether or not to pay your car insurance premium on a monthly or annual basis. The payment route you plan to go can make a big difference in the cost of your policy. However, there are arguments to be made for both annual and monthly payments, and it's important to consider the facts when making a decision that works with your unique situation.
Normally, your car insurance will cost close to a few hundred dollars less if you decide to make a one-time annual payment. This is the biggest and clearest argument for an annual or “in full” policy. After all, in the current economy, it's hard to find a few extra hundred dollars lying around. When paying this way, the terms of your policy and your coverage don't really change. So, if you opt to pay for your car insurance premiums on a month-to-month basis, you'll be throwing a decent chunk of money away. Still, many consumers don't have a year's worth of insurance premiums – often around $1000 or more – ready to spend. It can be hard to afford such a big one-time cost. A solution for this is to put a bit of money away every month for the annual payment. However, the first year of doing this sort of payment will be hard without an established bank account. Some drivers remedy this by paying monthly for a year while putting money aside for an annual plan.
Many people consider an annual payment less of a hassle than monthly payments, which is another reason that many drivers decide to pay in full. If you're not a very organized person, it can be tough to remember to send a check each month, and you certainly don't want to risk a lapse in car insurance. Contact your insurer about a payment plan. Very often, you can set up an automatic payment system through your bank, which removes the hassle of the month-to-month payments.
The last point you need to consider is that if you decide to change insurance companies mid-policy, and you have already paid for a full year of coverage, you may have to wait for a check of your remaining premium balance.
If you're happy with your insurer and you can afford it, the savings from annual payments certainly make that option the better choice. If you're unable to afford the big first payment, a month-to-month system may be more your speed.