Hello cartreatments.com friends, welcome to my site, in this post we will discuss about information of car insurance monthly cost vs yearly cost and find the best choice to make. So here we go…
Monthly VS Yearly Cost
We all want to save money on our car insurance. With inflation raising the cost of just about everything, this means insurance companies are charging higher rates for their policies. Most people will pay their insurance premiums on a monthly basis rather than a yearly basis. But did you know that some car insurance companies will give you a discount if you pay for your policy on a yearly basis rather than a monthly basis?
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The average American pays about $1,260 per year for car insurance. If these same Americans were to pay on a monthly plan, they would be paying $105 per month plus the service fee. The service fee is kind of like a financing fee which the insurance company charges so that they’ll insure you without getting the full money for the plan upfront. It is almost like how credit card companies charge you interest on the money they lend you for spending.
Insurance companies can set their own rates for the service fee, but it is about 2% of the monthly premium cost. So, if your premium is $105 per month, this means that $2.10 will get added on and then your total monthly premium will be $107.10. After 12 months, you’ll be paying $25.20 more for car insurance than you could have if you had paid the monthly plan.
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The Top 6 Factors that Influence Cost
Of course, there are other factors which influence how much money you pay per month or per year for your car insurance. Below are the top 6 factors.
- Location – The zip code where you live is factored into the cost. If you live in an area which has a lot of crime associated with automobiles, such as vandalism and burglaries, then it will raise your rates. On the other hand, if you live in a rural area then you will have lower rates.
- Accident History – If you’ve had car accidents within the last 5 years, then your insurance company is going to hold it against you (unless you have an accident forgiveness feature). The best thing you can do is avoid getting into more accidents and prove that you can be a responsible driver in the future.
- Age – Age is always a factor in what a car insurance rate is going to be. Young drivers under 25 and older drivers over 62 will see high insurance rates. This is based on statistics which show these age groups get into accidents the most.
- Gender – Insurance companies do like to discriminate against gender. Since statistics show that men drive more frequently than women and get into more accidents, insurance companies penalize male drivers with higher rates. There isn’t much you can do there if you’re a man.
- Additional Drivers – If you add more than one driver to your insurance policy, then it is going to cost more because you’re insuring them too. Only put drivers on your policy who are actually going to drive your vehicle on a regular basis.
- Make and Model – Obviously, the cost of insuring an economy car is going to be less than the cost of insuring a Lamborghini. If you are worried about cost, then don’t drive expensive cars because they are expensive to insure.
Best Choice to Make
If you are someone who lives paycheck to paycheck, then you will have no choice but to pick the monthly premium plan for your car insurance. But if you are in a position where you do have a choice and you want to save money, then choosing the yearly option will be better in that case. Some insurance companies may even charge as much as 5% for their service fee if you choose monthly installments. This is just one more reason to do yearly.