Paying in Installments Increases Total Insurance Payments
Auto insurance is a legal but costly necessity to obey the driving laws in most states. Since auto insurance can be high depending on how many people are covered under your policy and the type of coverage you have, many people opt to pay off their car insurance in premium installments as opposed to paying off the bulk total in one lump sum. Taking advantage of an installment play however, could end up adding even more costs to your auto insurance policy.
Monthly Fees for Monthly Payments on Auto Insurance
For the luxury of paying off your premiums in monthly installments, consumers are typically charged an additional monthly fee. The additional fee can be as much as an additional $10 a month or a total of $120 annually. The fees vary between insurance providers. Often, these fees are considered to be an “administrative fee” for the additional expenses the insurance companies accrue for managing the month to month payment collections.
Bulk Payments on Auto Insurance May Not Make Sense for Everyone
Consumers need to decide for themselves if it is more prudent to pay their total car insurance premium upfront, or to pay the additional administrative fee and their premiums on an installment plan. If you are debating between the two options, you need to analyze your cash flow to see what would fit in more easily with your monthly allotted expenses.
Many find it is worth the additional expense of paying more to enjoy the benefits of paying off car insurance using an installment plan. But if your main goal is to save as much as possible in your savings account, then paying of your annual auto insurance policy in one full lump-sum payment is certainly a way to do so.