Paying your first yearly or bi-yearly car insurance premium can really give you sticker shock.
This is one of the reasons that many insurance companies will give you the option to pay your premium on a monthly basis.
Just because it is a good option for one person doesn't mean it is the best option for everyone, so here are some of the pros and cons of paying your auto insurance monthly.
First, because people generally handle their finances with a monthly budget, it can be much easier to plug in an amount for car insurance so that you are always subtracting it from your income correctly.
It can be hard to remember to save up for a large payment, yet paying a smaller amount each month is often a way that a person can actually handle the payment.
This gives you more liquidity on a monthly basis.
If you were supposedly saving up for the payment, but didn't really put the money anywhere, you may find it difficult to come up with that much money when it is due and it may cause you undue stress on other bills or investments for a period of time, which is a lack of liquidity.
The downside to this is that you will have to open and file your monthly statements and write that monthly check.
Many insurance companies and banks have actually found a way to get around that con, by establishing automatic payments that can be initiated by the insurance company, who bills your bank, or by you on an automatic bill payment system through your bank.
Either way, having an automatic payment means that you don't have to worry about mailing it on time.
As for opening and filing the paper statements, most insurance companies have the option to switch over to electronic statements, so there is no paper to worry about.
The con to this argument is that some companies will charge a small fee to process your payment on a monthly basis, so you will want to remember to compare this type of charge when you are looking for cheap auto insurance.
This leads us to another pro for paying your car insurance monthly - the ability to be flexible in changing insurer s whenever you need to.
Many people begin with one insurance company when they get married and never think twice about changing to another company.
However, especially in the current market, auto insurance companies are working hard to get and hold onto a larger share of the market.
There will be companies that offer no-fee automatic payments to try to entice you to their company.
Others will offer lower premiums for the same coverage.
If you are willing to shop around for cheap auto insurance, you may find that you will be able to get equal coverage for a lower cost, or you may be able to get better coverage for the same cost you are currently paying.
If you want to switch car insurance companies and you paid on a yearly basis, then you will most likely have to wait for several weeks for a check to come, refunding you the pro-rated amount of the premium that was paid.
In the meantime, you will have had to make an initial payment to the new company.
This could seem to be pretty expensive while you await the check.
However, a monthly schedule will allow you more flexibility when changing companies.
Since everyone has different needs, as you look at your needs and your options, you will be able to decide whether paying yearly or monthly is the best way of paying for your car insurance.
This is one of the reasons that many insurance companies will give you the option to pay your premium on a monthly basis.
Just because it is a good option for one person doesn't mean it is the best option for everyone, so here are some of the pros and cons of paying your auto insurance monthly.
First, because people generally handle their finances with a monthly budget, it can be much easier to plug in an amount for car insurance so that you are always subtracting it from your income correctly.
It can be hard to remember to save up for a large payment, yet paying a smaller amount each month is often a way that a person can actually handle the payment.
This gives you more liquidity on a monthly basis.
If you were supposedly saving up for the payment, but didn't really put the money anywhere, you may find it difficult to come up with that much money when it is due and it may cause you undue stress on other bills or investments for a period of time, which is a lack of liquidity.
The downside to this is that you will have to open and file your monthly statements and write that monthly check.
Many insurance companies and banks have actually found a way to get around that con, by establishing automatic payments that can be initiated by the insurance company, who bills your bank, or by you on an automatic bill payment system through your bank.
Either way, having an automatic payment means that you don't have to worry about mailing it on time.
As for opening and filing the paper statements, most insurance companies have the option to switch over to electronic statements, so there is no paper to worry about.
The con to this argument is that some companies will charge a small fee to process your payment on a monthly basis, so you will want to remember to compare this type of charge when you are looking for cheap auto insurance.
This leads us to another pro for paying your car insurance monthly - the ability to be flexible in changing insurer s whenever you need to.
Many people begin with one insurance company when they get married and never think twice about changing to another company.
However, especially in the current market, auto insurance companies are working hard to get and hold onto a larger share of the market.
There will be companies that offer no-fee automatic payments to try to entice you to their company.
Others will offer lower premiums for the same coverage.
If you are willing to shop around for cheap auto insurance, you may find that you will be able to get equal coverage for a lower cost, or you may be able to get better coverage for the same cost you are currently paying.
If you want to switch car insurance companies and you paid on a yearly basis, then you will most likely have to wait for several weeks for a check to come, refunding you the pro-rated amount of the premium that was paid.
In the meantime, you will have had to make an initial payment to the new company.
This could seem to be pretty expensive while you await the check.
However, a monthly schedule will allow you more flexibility when changing companies.
Since everyone has different needs, as you look at your needs and your options, you will be able to decide whether paying yearly or monthly is the best way of paying for your car insurance.