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.