Monthly Car Insurance

Reader’s Question:

Why do some people like to pay monthly car insurance? It’s more expensive in terms of total amounts paid than if you pay the lump sum payable at one time, right?

Jonie

Las Vegas NV

The most common reason why many people opt to pay monthly car insurance is budget reasons. Basically, since having a car insurance policy is mandated by law before you can drive a car, buying the policy is an immediate need. Since a good car insurance policy is a bit expensive as a whole, people would want to pay in small increments for their insurance instead of exhausting their budget by paying the large sum cost of the policy. Realistically, many of people’s monthly income is not enough to pay the lump sum for the car insurance policy.

Even if they can barely afford to pay the whole cost of car insurance at one time, human tendency would still have them choosing to pay monthly car insurance so that they would still have enough cash at hand to go on with their lives until their next paycheck comes. For many people, the extra cash they get from not paying you the whole amount immediately serves as a security blanket for them just in case something happens, such as an emergency medical need or a job loss.

Paying for your car insurance on a monthly basis can be a very convenient way of budgeting your finances. Since you already know how much you will be spending a month for your car insurance needs, you can make necessary changes and adjustments to your budget plan and manage your finances wisely. Generally, your total car insurance premium will be divided into the number of months, depending on the duration of your car insurance policy. This amount plus a little more for paperworks and administration purposes will serve as your monthly payable amount.

If you cannot afford to pay the lump sum of cost for your car insurance policy, there is nothing wrong with having to pay monthly car insurance. In fact, many car insurance companies initially offer this type of payment to their prospective clients.

Remember though that your total expenses when you pay monthly will be a bit higher than when you pay the whole amount at one time. Paying monthly will also often lose you the chance to get discounts.

Reader’s Question:

What is better, car insurance monthly payments or annual payments?

Dina

Jackson MS

Car insurance companies provide different modes of payment when you buy from them to allow for greater financial flexibility on the buyer’s end. The payments can be annually, quarterly, or monthly. Each mode of payment has its own advantages and disadvantages. Since you only want to know about car insurance monthly payments and annual payments, we’ll stick with them.

Annual payments are advantageous on both the company’s and insured’s sides. On the part of the insurance company, that mean collecting the premium at once and use it for investment purposes. They would only need to issue one receipt and does not need to call the client to remind him of his payments. On the client’s side, an annual payment allows him to pay for a year-long coverage. He does not need to think of the car insurance payment the rest of the year. Moreover, the annual premium payment is lower compared to car insurance monthly payments. This is because interest is counted in accordance to the number of times that a premium is paid. There is an interest payment to since the company’s exposure is higher when a client does not pay annually.

In terms of car insurance monthly payments, the main advantage is, of course, having to pay for only a fraction of the entire premium. This is quite low and would not be hard on the budget. The main disadvantages though are many. One, the client has to remember paying monthly lest the coverage will lapse. Second, his overall premium payment is higher. Third, premium payments may not be paid if he suddenly loses his job or finds himself in an emergency.

As you can see, there are more advantages to paying annually despite the fact that it could be quite substantial. But if you have the means, I greatly encourage you to pay annually.

Reader’s Question:

Is there any way I can save on my monthly car insurance insurance payments?

Martha

Montgomery MD

Worried about your next monthly car insurance payment? I’m sure you would like to know of some ways on how to at least shave off a little from those fees. What with all those cost cutting measures that your boss may be implementing, your income could significantly lower in the coming days. Saving on every expenses could give you a breather. You might think that it is not possible to get a low cost car insurance at your age. Let me tell you that it is very possible.

Anyone can obtain these days all sorts of discounts from insurers if you meet their requirements. For senior drivers, those who are 50 years old and above but less than 75, they normally get the low cost car insurance for senior rates. This is because they are considered the safest drivers on the road. This assumption is supported by facts. Based on statistical evidence, this age group has the lowest incident rate. It’s probably because senior drivers do not like to speed up when driving, follow traffic rules and do not drive their car for unimportant outings. However, for those who are 75 years old and above, these people have the highest fatal accident rate during daytime. Old age lessens the reflexes of people, which could be the primary reason for those accident.

A good way to get a low cost car insurance, no matter your age, is to keep a clean driving record. Insurers will be happy with it because that would mean you are not a risk to anyone, including themselves. A clean driving record implies you have not filed a claim with them. The more years you have avoided filing a claim, the higher your discount will be. If you have made one last year, try not make another this year. You will be surprised at how much discount you could get if you keep it up.