When it comes to your auto insurance, there are essentially two basic payment plans. You can pay for the insurance coverage all at once or make monthly payments. There are advantages and disadvantages to making auto insurance monthly payments, but you will need to understand the pros and cons fully before choosing which method is best for you.
When you pay for automotive insurance, you are essentially covering a period that lasts for the duration of the policy which is often six months or a year depending on coverage. When you pay for it all at once, then you are covered until the coverage time has elapsed and need not pay any more. However, you can choose to pay for the coverage in monthly payments known as premiums.
A monthly premium is generally due at the beginning of each month, or it may be based on the date when the insurance was purchased. You will need to plan ahead when allocating the expected payments for your car insurance so that they will be made on time. Not paying your insurance on time will have costly ramifications that range from raising your premiums to potentially cancelling the insurance policy.
The advantages of making monthly payments on your car insurance start with the convenience that they offer. By paying in smaller amounts, you can budget them more efficiently so that you will have money for other things. It is true that many people pay their car insurance monthly to not exceed their budget. Another advantage is that you build up a good habit of paying for your insurance on time. This can be most helpful in terms of keeping you on track to pay your other bills.
However, you will pay more for the privilege of paying per month because you will have to put up a deposit. Mostly, when you pay your insurance through monthly premiums, you are taking a loan out from the insurance company and paying it back in instalments. To help ensure that you make your monthly payments, the insurance company will demand a deposit which is usually 20% of the total amount of coverage.
So, if your entire insurance policy is £2400, then your first monthly payment will be £200 plus 20% or £480 for a total of £680.
While the rest of your payments will be at £200, the first one may be tough to make if you are on a tight budget. One answer is to have car insurance no deposit monthly payments which will mean that you do not pay a deposit at all. However, this type of policy is only available for those who qualify which generally means having good credit and a steady payment history with the company.
However, you will have to make the choice of whether to pay monthly or all at once so that it fits best in your budget. In order to have cheap car insurance, monthly payments must be made on time so that you build up a good track record with the insurance company.
Car Insurance Deposit Explained