Pros and Cons of Paying Car Insurance Monthly
Car insurance, also known as motor insurance, is crucial if you own a car. Without such protection, you will experience huge losses in case something bad – a car crash, for example – takes place. However, when it comes to such protection, you may often be bothered by the costs you may have to pay to keep you protected. Fortunately, insurance companies usually allow you to choose whether you want to pay in advance or monthly with the latter being chosen most of the time. Yet, before making up your mind, it is a wise thing to consider the pros and cons of paying car insurance monthly.
With monthly payment, the sum of money you have to take out of your pockets each month is lower than the sum of money you have to spend by paying in advance. For most people today, especially due to the recent global economic recession, monthly payment is their best bet. A monthly payment enables them to manage their budgets more easily. After paying their bills, they can use the remaining money for investments, entertainment and other stuffs. Also, with monthly payment, you know how much money you are expected to spend each month.
Unfortunately, though, monthly payment will cause you to have to manage more paperwork. You will have to file your monthly bank statement for your future reference. In addition to that, you may have to write a monthly check as well.
Nevertheless, if you want to spare all the paperwork difficulties, you can leave your insurance company to draft your car insurance costs directly from your bank account. Of course, do this only if you really trust your insurance company. You can also set the payment schedule as well.
If you have limited funds, you can usually hold your money for a definite time period. This is possible thanks to the valuable liquidity provided by most of today’s motor insurance agents.
If you choose to pay your car insurance monthly, the company you sign up with will charge you with higher fees than if you choose to pay in advance. The fees become higher because there is a small fee charged every month. Normally, the monthly fee ranges from one to a few dollars. However, over time, the monthly fees may accumulate up to fifty dollars or more.
There are not few car owners out there that do not realize the possibility of turning to another motor insurance company thanks to the monthly payment. This is very important considering that most insurance companies will always try to offer low premiums at times. So, if you pay your car insurance monthly, you have the option to turn to another company and pay less for the equal protection coverage.
This is something you can’t do with upfront payment. Yes, your insurer will give you a balance with a pro rating if you make an upfront payment. However, the thing is that you will have to wait for your check that may be needed to pay another insurer. Unfortunately, the check can usually take about 2 weeks.