If you have car insurance, you might be wondering if you can change your payment period. Over a given year, your money can change in value due to inflation. If you want to avoid this or just get this payment off of your shoulders, you might consider changing your car insurance payment period. If you have the money for it, you may even opt to pay for your car insurance on a yearly basis. This can cost a lot of money upfront. However, it is nice not to have to have that car insurance bill every month.

Should You Pay For Your Car Insurance Yearly Or Monthly?

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When deciding whether or not you should pay for your car insurance yearly or monthly, you need to consider your financial situation. If you have a lot of money saved up, you might consider paying for your car insurance yearly. However, if you don’t have much money saved, you might want to pay for it monthly. Paying for your insurance all at once is a large hit to take. Although you may receive a discount to pay for it all at once, it might not be worth it. You need to make sure that you have enough money to pay for your other monthly obligations. Don’t strain yourself too much financially by paying for your insurance all at once.

What lengths of policies do insurance companies provide?

Car insurance companies actually provide more options than just monthly and yearly plans. Insurance policies normally range from 6 to 12 months in length. Sometimes, you can find an insurance company that will actually take you as a client for a period of up to two years. At the end of the policy period, you can renegotiate costs and get a new insurance policy. Depending on your situation, you might want to consider getting an insurance policy that only lasts for a certain length of time.

How long an insurance policy should I sign for?

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The length of your insurance policy should really depend on your situation. If you have something on your record that is due to be off of it in a short period of time, you might want to sign for a shorter policy. This will allow you to renegotiate after your policy is over and be able to pay cheaper insurance premiums. However, if you have a clean record and your insurance rates are pretty good, you might want to sign for a longer period of time. Generally, your insurance rates are not going to drop significantly by signing up for a six-month period compared to a year-long period. If you have a clean insurance record, then going the longer route might be best. It can allow you to have some peace of mind and some freedom from talking to your insurance company for a while.

Pros Of Annual Car Insurance Payments

There are several reasons why you might want to pay for your car insurance on an annual basis. Depending on the insurance company, you can receive a discount ranging from 5 to 20% at a time. Another great thing about paying for your car insurance on a yearly basis is that throughout the year, you don’t have to worry about missing a payment. Your insurance company is not going to be withdrawing from you on a monthly basis at all. The best part is, the next year, you could always pay monthly. If you pay annually, you just have to pay your other monthly financial obligations. Once you do that, you should be good to go.

Cons Of Annual Car Insurance Payments

There definitely some cons of annual car insurance payments as well. Paying for your annual car insurance payment all at once is going to be a hefty sum of money. Although you may receive a discount, it is definitely a large portion of the money to pay out all at once. Unfortunately, you also need to consider what would happen if you got into an accident. If you get into one right after paying your annual car insurance payments, you need to have enough for a deductible. No matter your situation, you will still be asked to pay a deductible if you need to make a claim. It is important to make sure that you are able to pay for an insurance claim deductible, even if you decide to make annual car insurance payments.

Is Monthly Or Yearly Car Insurance Payments Better?

The answer to this question right, it largely depends on your financial situation. If you want a discount and you have the money to spare, you might want to consider paying for yearly car insurance. However, if you are a bit tight on money, you’re likely going to want to pay monthly. It is always a good idea to find out how much of a discount your insurer offers. They may not offer much for paying 12 months instead of one month at a time. In which case, it might not be worth it for you to do right away. Although you might not be able to afford the annual payments this year, maybe you can set a goal to do it next year. The discount could be worth your while.

Why Would an Insurance Company Offer me a Discount to Pay Annually?

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Insurance companies offer annual discounts for several different reasons. First of all, there is a cost to process each one of your payments. Each time that you pay, your insurance company needs to make sure that they receive the payment in full. Second of all, insurance companies want to get your money as soon as possible. This allows them to be able to invest in other ventures and not have to worry about you not paying for your car insurance. There are a lot of people that actually miss car insurance payments. An insurance company accepting an annual payment from you takes a lot of the risk out of it for them.

To Conclude

It is always nice to get some kind of a discount on your car insurance. It isn’t always worth it for everyone to pay for their car insurance on a yearly basis. If your financial situation is tight, you should definitely consider paying monthly. Although it might cost you more, at least you won’t be financially strained at the start of the year. Now that you know this discount exists, maybe you can save up to aim to pay for an annual car insurance payment next year. Remember, if you want to get the best possible auto insurance quote, it is a good idea to contact multiple insurance companies to see who can give you largest discount.

Resources:

http://blog.aisinsurance.com/2013/12/17/should-you-pay-for-your-car-insurance-yearly-or-monthly/
https://www.answerfinancial.com/insurance-center/should-i-buy-a-12-month-auto-insurance-policy-or-a-6-month-auto-insurance-policy