Most car insurance companies set the payment dates for your insurance based on the policies or preferences you specify before signing up for the plan. However, the payment schedule can be altered when paying ahead of time. Whether you ask for a preselected payment schedule or pay early, it’s up to you to decide the best time frame, such as monthly or biannually. Both have benefits along with some disadvantages.
Negative situations can occur, leading to a reduction in income that could impact your expenses. Receiving a bill for a six-month car insurance payment is stressful if you’ve lost your job or received a significant pay cut. When making a monthly payment, you can budget your expenses better and determine which costs to cut and which are essential. The lower payment amount may also seem less challenging to make than making a six-month payment with a reduced salary. Regardless of your payment schedule, speak with your car insurance provider about programs you might qualify for due to reduced income.
Monthly payments can help you avoid lump-sum amounts, especially when you lose income or experience other financial emergencies. However, paying each month could mean higher premiums. For example, some car insurance companies offer discounted rates when you pay ahead of schedule, such as every six months or annually. In some situations, the companies provide lower rates because they’re guaranteed payments instead of collecting each month. The advance installments may seem costly, but when you create a budget, you save money that can go toward other bills without compromising your insurance plan and benefits.
Better Credit Score
This is one of the top reasons some individuals prefer to pay their bills monthly, including car insurance. Boosting your credit score can lead to other advantages, such as higher credit limits or better financing options when purchasing homes, cars, and other assets. Therefore, if you want to boost your credit score, it would be best to pay your car insurance every month instead of every six months. However, remember to make on-time payments because late or skipped payments could cause your credit score to decrease significantly.
Fees & Penalties
If your insurance provider charges processing fees for electronic payments, this could lead to more expenses when making monthly payments. In this instance, paying every six months is the best option.
Making monthly payments could also lead to confusion, especially if the due dates are similar to those for other bills. As a result, you may believe a payment was made when it wasn’t. In this case, you might be charged late penalties in addition to processing fees. In some instances, the time lapse could lead to changes in your current plan. However, making payments every six months could prevent the extra costs and penalties or lapsed coverage.
When they need affordable, reliable auto insurance, San Diego drivers turn to Altra Insurance Services. For high-quality coverage and outstanding service, reach out to one of our friendly representatives today at (800) 719-9972 to learn how you can save money on your car insurance.