If you are planning to drive your car around the law requires you to have car insurance and there is no way around it. The question that is frequently asked is whether you should pay your auto insurance annually or monthly. The correct answer will depend on your personal circumstances and financial situation. In this post we will discuss the pros and cons associated with each and point out which option may be more suitable for your case.
As mentioned above the option of paying your auto insurance monthly or annually depends on your individual case. This question is really no different than dealing with any other installment program such as a gym membership or a mobile phone contract. Let’s look at which option is right for your personal case by looking at the pros and cons of each scenario.
Advantage of Paying Car Insurance Monthly
In this section we are going to discuss the advantages of paying your car insurance on monthly basis. As you will see the advantages are mostly financial as well as flexibility to negotiate or change your provider.
- Monthly Payment Are More affordable – If you are like millions of people that are leaving pay check to paycheck or have a hard time saving much money, then it is recommended that you choose the monthly option so that you give yourself some breathing room. This option allows you to pay a little each month so that you are not hard pressed for money.
- Liquid Cash for Unexpected Events – Life is unpredictable and you could get hit with an unexpected expense such a medical emergency, car repair or an unfortunate event may creep up such as loss of income that requires you to have some liquid cash on hand to get you through the day. Therefore if you don’t have a lot of saving, it is wise to choose the monthly option.
- More Flexibility – The most important advantage of selecting the monthly insurance payment is having more options and leverage. If you have paid your entire payment in a lump sum and you find out later that you are not happy with the current provider then there is really not much you can do. Whereas if you are on a monthly plan you can always change providers and you have more leverage in terms of negotiation with your current insurance company as the current provider does not want to lose your business and may show more flexibility.
Disadvantages of Paying Your Car Insurance Monthly
This section describes the advantages of paying your car insurance annually and disadvantages of monthly payments.
- More Processing Fees – If you decide to pay your car insurance annually then you save money on processing fees as there is a fee to process your monthly payments.
- More Overhead – One disadvantage of paying your insurance monthly is you need to keep track of your record and ensure that you pay off your dues every month. Whereas with annual payment, you make one lump sum payment and you don’t have to manage any other payments
Get Your Rates Online
If you are looking to find out how much auto insurance will cost, your best option is to start comparing prices online. You can now compare car insurance quotes from major insurance providers so that you can easily determine the policy that is best suited for you.