Auto Insurance Payment Methods: Pay off or Payment Plan?
Q: I’ve always paid my auto insurance bill on my credit card over a period of 4 months and it seems to be a lot higher than the premium the insurance company stated once I add the monthly payment fees and credit card interest. Should I go for a monthly payment plan and mail in a check? Pay the whole thing over the phone with my debit card? Or is there a better option?
AIS Answer: Insurance companies typically offer payment plans of varied lengths, and of course accept all major credit cards as a form of payment. Although this is one of the most comment payment methods for policyholders, it’s not the most efficient and almost always costs you more in credit card interest and payment plan fees.
When you sign up for an automobile insurance policy and are given the choice to pay online, over the phone or in person (depending on if you went through an insurance agent), the range of choices can be complex. Ultimately the options you have are there to either make paying your premium cheaper, or more convenient - rarely both.
While the amount you save from stretching your payment plan from 1 to 2 to even 4 months or more for a 6 month policy isn’t astronomical, it could still be a good chunk of change. If you have the money in cash and can use a debit card or a check to pay off your whole 6 month premium, it is highly recommended due to the fact that you’re not going to incur payment plan fees, interest fees on your credit card, or late fees for accidentally missing payments.
If you must use a payment plan, the general rule is to pay off the premium as quickly as possible. A larger portion of your premium will be due on the first payment anyway, so if you have the ability to pay it all at once that’s even better, if not, try a 2 month or 3 month plan if it’s offered, but always ask your insurance company which option that fits in your budget will save you the most money.
Start Your Auto Insurance Quote
Related Articles
Filed under: Auto Insurance Questions
Content contained within AutoInsuranceStories.com is copyright autoinsurancestories.com © 2007. This content is not to be construed as insurance advice. You must always speak with a licensed insurance agent regarding your auto insurance policy.
I usually make payments. My car insurance is so high that it doesn’t make sense for me to give the company $1800 for a 6 month policy all at once.
…n/m
I paid my last 6 month policy on my truck in one payment, but with my cars I use a payment plan. I don’t want to be out $1,200.
I don’t pay off my insurance because if I decide to switch companies I don’t want to wait for a refund.
progressive has a really fair payment plan, and low rates. A lot of the other companies do as well, but most insruance companies I’ve come across want the bulk of the money in the first payment and have few options.
For instance I was with this one company Deerbrook out of Texas a few years ago and the only way you could pay was through your agent, or I believe mailing it in. Their website wouldn’t allow you to set up an account to make payments. The feature was supposed to be there but it never worked.
I would stick with a major insurance company that already has an established online presence and proven payment methods.
some companies have better payment methods than others that’s for sure.
pay off the balance in one payment and you’ll not only save money, but frustration of missing a payment if you forget. That and when you get paid it will feel like you have extra money because you’re not paying an insurance company every month.
if you have to make a payment plan pay by check or credit card. If you pay over the phone they usually charge around 14$ or more to process the payment, and a credit card has interest.