YOU ASK:

Can I pay monthly for car insurance?

WE ANSWER:

Although the majority of auto policy owners choose to pay their premiums annually, insurance companies usually offer three other payments options: you can pay monthly, quarterly and semi-annually.

What to Consider when Choosing to Pay Monthly for Car Insurance

First of all, bear in mind that, although you will be paying monthly, you cannot surrender the policy at any point before the car insurance policy contract is up. Most auto insurance companies write up their contracts for a minimum of three or six months.

Appealing though the monthly-payment option may seem, it is more expensive in the long run. You might be paying smaller installments every month, but if you add them all up, it will turn out that you are paying, for example, roughly $50 more in car insurance premiums per year, than you would have if you had chosen the annual payment option.

Insurers, of course, prefer that car insureds pay on an annual basis, which is why they typically charge a service fee for providing you the convenience of monthly billing. Some companies might go even further by making you pay one extra monthly premium in case you are late with a payment.

Who Monthly Car Insurance Payment Is For

People living on limited budgets, who cannot afford to take out a large lump sum. Instead, under the monthly premium payment option, they split the annual premium into smaller monthly installments, which they might find more manageable and affordable.

Some people opt for monthly car insurance payment because they simply find it more convenient. These are typically people who use automatic billing systems, in which certain amounts of money are automatically transferred from their bank accounts every month to cover different bills and debts.

High-risk drivers can also benefit from the monthly car insurance payment option, since their auto insurance rates are typically high and would look very steep if paid annually.

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