Monthly Payments vs. Lump Sum Payments

Know the DifferenceIf you’re like everyone else, you’re probably interested in car insurance tips that’ll keep more money in your bank account and less money in the pockets of the insurance company. There are quite a few ways to save on car insurance, but by far the most effective method is through accumulative efforts. In other words, nickel and diming your way to savings. Paying your bill in a single lump at the beginning of the year, instead of making smaller monthly payments, is one way to do it. How so?

  • Paying in advance guarantees coverage. If, for whatever reason, unforeseen financial hardship should cause you to miss a monthly insurance payment, you’ll be out of luck with a canceled policy and at extreme risk by driving without insurance.
  • Making monthly payments costs you more. Most car insurance companies charge a small processing fee to automatically withdraw payment from your bank account on a monthly basis, making the lump payment option a no-brainer for anyone who wants to save on car insurance.
  • Money management becomes easier. If you’re living paycheck to paycheck, it might not be possible for you to make a single large payment for your car insurance—but biting the bullet once could make your money management easier if you don’t have a pesky monthly car insurance bill to pay.

Although paying monthly makes switching auto insurers a bit easier for those living on extremely tight budgets—you won’t have to wait weeks to get a pro-rated refund check if you haven’t already paid far in advance. Choosing the single payment method is the option that’s guaranteed to save you money on your car insurance.