There are always a lot of questions that exist among consumers and potential insurance carriers. These questions pertain to the type of coverage that is available, the premium that is being charged, and especially the payment terms being offered.
Many consumers want to know what the options are when it comes to actually paying the premium for a car insurance policy. Can they pay it monthly or do they have to pay it annually, with the whole premium being paid up-front? These are all very good questions and the answer is one that is also favorable to consumers.
The reality is that you as the consumer hold all of the power when you are shopping for car insurance. You have the ability to go out there on the insurance market and find pretty much anything that you want.
There are going to be insurers that are offering all different types of payment terms, coverage options, all at different premium rates. What is going to make the most sense for you and your current situation? With these answers in hand, it is up to you to simply shop around.
Payment Terms Routinely Available
The two most common types of car insurance payments are annual and monthly. You can either pay the full premium in one lump sum payment every year, or you can take that premium and spread it out over as 12-month period.
There are other variations to this as well; semi-annual and quarterly payment plans allow you to further customize what times of year you pay for your auto insurance.
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Discounts May Be Available
You want to shop around in terms of the car insurance that you buy because discounts may be available to you based on the payment terms that you choose to go with.
For example, you may get a discount from an insurer when you pay monthly, but have that payment be set up for automatic payment from your checking account.
An automatic payment method virtually guarantees the insurer they will always be paid on time, which can lead to a discount for you as a result.
The Risk You Present to an Insurer
The only limit in terms of what you may be able to find on the insurance market in regard to payment terms is going to be dictated by the risk that you present to an insurer.
Credit scores can have a big impact on payment terms. If you have a very poor credit score, many insurers are likely going to ask that you pay for your insurance policy in one annual payment up-front.
If you are offered a monthly payment option with a low credit score, the initial deposit might be higher than average.
Looking at it from the opposite spectrum, if you are someone with a great credit score, you’ll probably have complete freedom in choosing how you pay for your car insurance.