Auto Insurance Payments
When you are in the market to get your car insured, there are a number of ways you can make your auto insurance payments. Most policies last for a period of 6 months. Some, if you inquire, will extend for 12 months. The price that you receive for that period is called the premium. Essentially, the 2 ways to pay that premium are a lump sum and in monthly payments.
The quickest, most hassle-free way to pay your auto insurance premium is to pay it all at once in a lump sum. By doing this, not only do you avoid having to shell out money each month, but you also avoid the monthly service charges that insurance companies tack onto your bill for the right to pay in installments. This service charge can range from $3 to $10 or more per month and can add $60 or more to the total cost of your premium. Paying in lump sum lets you avoid this hidden charge.
Because not every driver has the cash on hand to pay for their premium at once, insurers offer payment plans. They divide up your 6-month premium into monthly installments, letting you pay basically 1/6 of it every month. For the benefit, they charge a monthly service fee that adds to your total cost. Paying in installments is good if you cannot cover the entire cost up front, but know you will end up paying more than is listed on your policy.
Auto insurance payments can be made one of two ways—up front in one lump sum or month to month. There are costs and benefits to both methods. If you can afford it twice a year, it makes sense to pay in full. If not, a monthly payment plan offers you flexibility over the period of your coverage.