When people buy auto insurance, many times they are unaware of all the payment options that are available. Many people like to pay for monthly car insurance by writing a check each month to their insurance company. Other individuals prefer to pay for a full amount of coverage for annual coverage as opposed to paying each month. Why do so many people tend to pay for their car insurance on a monthly basis as opposed to on an annual basis?
The reason that most people like monthly payment plans is so that they can save money in the short term. Even though people that pay for their entire policy in a single payment may be saving money in the long run, a lot of families simply do not have enough money saved up to make one enormous payment. For this reason, most people tend to request a billing statement on a monthly or bi-monthly basis from their auto insurer.
If you happen to be short on money when signing up for your car insurance, there is no way you are going to want to purchase full annual coverage because you will not be able to afford it. Instead, you probably will be able to afford a monthly car insurance plan because you will be earning money from your job and will have enough saved up before the end of the month when your payment is due.
Are you a person that is presently signed up for auto insurance under a monthly payment plan? If you are paying by the month and are not living paycheck-to-paycheck, then you should probably consider thinking about making one annual payment. If you are able to switch to a plan that requires paying one big lump sum each year for your coverage, you will be able to take advantage of more car insurance discounters. Most insurance companies are going to lower your payments if you decide to make bi-annual payments (every six months) or even bi-monthly payments (every other month) for your auto insurance.
Even though you can stand to save more money if you make larger payments in advance, there are still some benefits to getting monthly car insurance. The primary benefit is that you save yourself a lot of money by not having to withdraw a lot of money from your bank account in order to afford car insurance. You will make smaller, more frequent payments than someone who gets an annual payment plan. The other nice thing about monthly coverage is that you can cancel your policy before making your payment and are not "locked in" with any specific insurance company.
If at any time you are unsatisfied with your coverage, you can switch to a different company. The bottom line is that if you are experimenting with a new insurer for your automobile, it is smart to stick with making monthly or bi-monthly payments because you will be entitled to cancel at any time. However, if you have satisfied with your insurance coverage under a certain company for many years, you could stand to save yourself some extra cash by paying more money upfront (e.g. larger payments) for a longer coverage term.
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