If you are purchasing and insuring a car for the first time, you may have a big surprise in store when you see your first yearly or bi-yearly premium payment invoice. For the average person who lives on a monthly budget, it can be very challenging to come up with a large amount for car insurance each year or every six months. For some people, that may be an excellent option, because of the way they receive their income, but for others, it may cause quite a hardship and put a big hole in the bank account.
One of the reasons that many people prefer to work with their insurance companies to arrange for a monthly payment rather than a lump sum payment is because of budgeting issues. It can be somewhat difficult to save up each month for that payment, because your bank account will reflect a higher amount that you can actually use. Some people fall into the trap of spending what is in the account before remembering that they are saving for a specific payment for their car insurance, and that can make it very difficult to come up with enough money to pay the premium when it comes due.
By dividing the payment into equal monthly amounts, you can more easily work it into you budged. Many companies have gone to the paperless statements and the online billing, so you don’t even have to worry about getting the monthly statements in the mail or writing and mailing off the check. You can access your account online at any time and you can set up automatic withdrawals from your checking account so that your payments are never late.
One of the reasons that some people don’t switch to a monthly car insurance premium payment is because their insurance company charges a small fee if they don’t just make the yearly payment. If you are looking for a new insurance company that offers cheap car insurance, you will want to be sure to find out if they charge an additional fee to switch to monthly payments.
You may not have thought about this next reason it may be a good idea to switch to monthly car insurance payments. If you are paying by the month, you can be more flexible about changing auto insurance companies whenever you wish. Did you know that many people will get married and buy a car and sign up with an insurance company and stay with them for the rest of their lives? This is great loyalty, but times do change, and the car insurance companies have begun to be much more competitive than they have ever been.
Many companies in the arena mean that there are more options for you. It may even be that your current car insurance company offers lower rates to attract new customers. If this is the case, you may be able to negotiate a lower rate in order to stay with them. Many companies try to compete with fewer fees or lower premiums for similar coverage. By shopping around, you will be able to determine whether your current company has the best prices or if you are ready to switch to another company.