Monthly vs Yearly Car Insurance Payments — What's Cheaper?
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When you buy car insurance, most carriers will give you multiple options for how to pay for the premiums your policy — monthly, every six months, or paying for an entire year all at once.
For example, when purchasing a new policy, an auto insurance company might give you two options for how you could pay a premium for the same coverage — you could pay $100 on a monthly basis, or you could pay $1,100 as one annual payment.
Monthly payments may seem like the cheaper option upfront, but it’s almost always the most expensive way to pay for car insurance in the long run!
Even though it’s more money upfront, you’ll save money on your rates if you can pay for the year or for half a year when you buy car insurance. Those longer-term policies usually come out to be cheaper than paying a monthly rate for the same amount of time. That’s because you’ll avoid fees that come with the payments.
So does that mean that paying for longer terms upfront is always the best option? It depends on your financial situation. Do you have enough money to make one lump sum payment, or will you need to pay smaller amounts, even if it means you might pay more overall?
Some drivers think they should pay for their policy monthly to make it easier to switch. After all, doesn’t paying for 12 months all at once mean you’re locked into a policy for the next year? But that’s not true at all. Most insurance companies will refund you the remainder of your premium when you switch. Some carriers may have penalties for switching, but if you are able to save money with another carrier, it will probably still be worth it to make the change.
And there’s even more good new — at Jerry.ai we will not only help you switch car insurance, we’ll also get you a refund for whatever time remains from your previous policy. So go ahead and pay for the longer term!