Should You Pay Car Insurance in Full or Monthly?

You can save on your insurance premium if you pay your policy in full, but lump sum payments might be hard on your budget.
Written by Hillary Kobayashi
Edited by Amy Bobinger
Whether you should pay your car insurance in full or in monthly payments depends on your budget. If you’re able to pay your
car insurance
in full every six months or annually, you’ll usually receive a discount. Lump-sum payments might not be the best decision if you don’t have a lot of money in savings, though. 

Car insurance payment schedule options

Car insurance companies will usually give you the option of paying your premium on one or more of the following schedules: 
  • Monthly payments: Pay every month until the end of your policy term
  • Three-month payments: Pay for a six-month policy in two installments
  • Six-month payments: Pay upfront for a six-month policy
  • Annual payments: Pay upfront for a 12-month policy (most car insurance companies don’t offer this option)
Your scheduling and payment options may vary depending on your car insurance company. Some providers do not offer annual premium payments except in states where they are required by law to do so. 
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If you have a bad driving record, low credit score, or history of cancellation for non-payment, your insurance company may require you to pay in full to obtain coverage.

How to choose between pay in full and monthly payments

Before you pick a payment plan, ask your provider what the total cost of your bills would be (including processing fees) for any of the installment plans that you’re considering. Find out if your provider offers a
paid-in-full discount
and ask how much money it could save you.
The experts at
compared thousands of car insurance policies purchased by real Jerry users to find out how your payment options can impact your car insurance rates. They found that while most insurance providers offer savings of 2–5% for paying your premium in full, some will reduce your premium by as much as 25–30%. Here’s what that looks like broken down by carrier: 
Monthly installments 
Paid in full
Savings %
$1604/yr ($134/mo)
$1919/yr ($160/mo)
$1431/yr ($119/mo)
$1420/yr ($118/mo)
$2384/yr ($199/mo)
$2398/yr ($200/mo)
$1456/yr ($121/mo)
$1725/yr ($144/mo)
$1356/yr ($1135/mo)

Pros and cons of paying in full

Even though paying in full for a six-month or one-year policy may seem like a lot of money all at once, this option will usually be cheaper in the long run.
Our experts compiled a list of the upsides and downsides of paying in full:
Pros of paying in full
Cons of paying in full
Many auto insurance providers offer paid-in-full discounts to policyholders who pay their entire premium in a lump sum at the beginning of the policy term. These discounts can be 10%-20% of your total premium.
Paying your whole premium upfront may be difficult depending on your financial situation.
You won’t be charged any processing fees.
Paid-in-full discounts aren’t available everywhere.
and Washington DC don’t allow paid-in-full discounts, and
excludes the discount from certain policies. 
You only have to think about paying your car insurance premium once every six months or once a year. 
Paying for your premium in one lump sum means you have less freedom to change insurance providers. If you change insurance companies, you might have to pay a cancellation fee—although you could get a refund of any unused premium. 

Pros and cons of monthly payments

You won’t receive a pay-in-full discount if you opt for a monthly payment plan, but there are still some good reasons why you might go with a monthly payment schedule.
Our experts have broken down some of the advantages and disadvantages of monthly payments:
Pros of monthly payments
Cons of monthly payments
Paying on a monthly basis might be easier to budget, especially if you have lots of other bills to consider.
Monthly payments cost more because auto insurance companies often charge installment fees if you pay in monthly installments since there’s more administrative work associated with more frequent payments.
You can easily switch car insurance companies if you find a better rate. 
You may be more likely to miss a payment on a monthly schedule, so you could pay more in non-sufficient fund (NSF) fees or late fees. If your insurance is canceled for non-payment, you’ll pay higher insurance rates because of the
lapse in coverage
Setting up auto-payments can help you avoid missing a payment on a monthly schedule. 
If you cancel your policy early, you may not receive much of a refund, depending on your insurer’s cancellation fees.

Other payment discount options

Paying in full isn’t the only way to get a payment-based
car insurance discount
. You might also receive a discount for:
Ask your insurance agent to learn more about what insurance discounts might help you save on your policy.

Other ways to save on car insurance 

Whether you opt for a monthly, six-month, or annual payment plan, it’s a good idea to compare auto insurance rates a couple of times a year, even if you decide to stay with your current provider. 
app is the easiest way to compare car insurance quotes from dozens of car insurance companies. Simply download the app, add details about your driver profile and driving history, and then scroll through the cheap car insurance rates available to you. You can purchase a new car insurance policy and access your
proof of insurance
right in the app.
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How many months does car insurance last?

Car insurance policies usually last for either six or 12 months. It’s most common to purchase a six-month car insurance policy, but 12-month car insurance policies are available from some providers as well.

Is insurance paid monthly or yearly?

You can usually make monthly payments on your auto insurance policy, even if the term is six or 12 months. However, paying your auto insurance premium in full can earn you a discount. 

How is a car insurance premium different from a deductible?

Your car insurance premium is the cost of your policy. Your
is an out-of-pocket amount that you must pay before your insurance coverage will pay for certain types of claims.

What month is car insurance most expensive?

There’s not a huge variation in car insurance prices from one month to another, but some insurance experts believe that it’s best to buy car insurance in December. Insurance companies tend to make rate adjustments in January, so if you buy in December, you’re locking in a lower rate for as long as possible.

Why are GEICO policies only six months?

It’s common for insurance companies to offer six-month terms. In fact, several other major insurers, including
State Farm
, and
, only offer six-month policy periods—you can’t buy annual policies.

Are six-month auto policies more expensive than 12-month policies?

If you can find a provider offering a year-long policy, it will usually be cheaper than a six-month policy if you pay for the entire year. If you pay monthly premiums rather than one lump sum payment, the total cost of your annual car insurance may be the same.

Do all carriers offer six-month car insurance policies?

Yes, insurance companies typically write policies for six months, although some also offer the option to purchase a policy that lasts a full year. 

Meet our experts

Hillary Kobayashi
Hillary Kobayashi is an insurance writer and editor specializing in insurance and finance topics. Hillary’s mission is to use her knowledge and love of education to help car owners better understand how they can save time and money on car ownership. The articles Hillary has published for Jerry span topics from state-specific bill of sale requirements to SR-22 insurance information.
Prior to joining Jerry, Hillary spent over ten years in education at Pacific University and the University of Oregon.
Amy Bobinger
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Licensed Insurance Agent — Expert Insurance Editor
Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars.
Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.

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