Annual vs. Monthly Payments

Tuesday, March 3, 2020

Annual vs. Monthly Payments

When signing up for auto insurance, you have the option of making a single annual payment instead of monthly payments. In some cases, this isn’t a bad idea, but there are pros and cons to the annual payment plan. Neither option is best, but one might be better for you than the other, depending on your circumstances.

You may want to consider an annual payment plan if…

Supposing that you do have the money on hand to get the payments out of the way, and your car is in fine working condition, it may still be preferable to go with a monthly plan. Whether because you’re saving up for a new car or you want to keep your options open for shopping around with other insurers, a monthly plan is easier to cancel at any time.

Your insurance company prefers annual payments because it’s cheaper for them to manage. They only have to process the payment once, rather than twelve times a year. That saves a lot of labor hours over time.

If you’re happy with your current auto insurance provider, plan on driving this car for a year or longer or can afford to get your payments out of the way for the year, there really are no downsides. Just make sure that’s what you want before you commit.