Dividing a large ticket price into bite sizes makes sense and attracts more buyers to it. However, it isn’t as simple as that since there are several considerations in place. Most carriers see it as extending credit and some may like to take advantage of the situation by charging high set up fees and interest for such facility. Furthermore, there are qualification requirements to be met before getting excited about spreading it out. So, just settling the premium in full may work out a bit cheaper, even before the discount.
Naturally, carriers like to receive their money at once and therefore offer savings when you pay full auto insurance premium upfront. The logic behind it is pretty simple. Technically, premiums are due at the start and it is costlier to administer setting it up in several bits. Most importantly a fully paid up policy isn’t likely to be cancelled due to missed intallments or any other reason. Majority of them prefer this option and don’t mind giving a little incentive to encourage policyholders.
Some quotes may be calculated on the bases that customer would want to spread the cost, especially if there is no obvious charge for this facility. When you can and want to settle at once they may offer about a 5% discount. Here is more explanation on this topic and various vehicle insurance payment options.
Generally, there are fees and interest charges for spreading it out. You will see that the total amount is different for monthly and one settlement. You may even want to consider using a credit card especially when you can clear the card balance within two or three months. Some cards will not apply interest until the statement date.
In addition, keep in mind that most auto insurers check your credit score before they agree to installments. If you cannot pass this check you cannot have it anyway. Having a good score will most likely reduce rates as well as allowing you to spread the costs across several months.
When you are getting automobile insurance quotes check the credit facilities as well. For some people this may not be important. However, you would want to know if you could use installment option and the charges for it when you don’t have enough money for the whole amount.
You may end up choosing a different policy depending on answers and facilities on offer. Some carriers may offer you interest free 3 installments or a similar arrangement. You can compare all the options in terms of price and payment by getting at least five quotations.
Managing full car insurance premium in one go may be difficult but it is one of the easiest discounts you can qualify for. Also, you should keep in mind that they may not make this clear and you need to ask for it. Furthermore, some of them may be keener if it was an early renewal. In a way, if you are happy to sign up for it one or two days ahead of time and pay upfront you can have it cheaper.