There are two options for paying for an automobile insurance policy; a one time payment at the beginning of the policy period or monthly throughout the duration of the policy period. Many people cannot afford to pay the entire cost of the policy premium in one lump sum. Thankfully, almost every insurer allows their drivers to pay for the policy in payments to make the price more manageable for their budgets.

Down Payment
It is often discussed that a policy that is being paid for monthly will require a down payment. The amount of this down payment is decided by the insurer, and all of them require a different amount. Some insurers want the policyholder to pay 25% of the total premium upfront. Then the remainder of the premium cost will be divided into equal payments throughout the policy period. For example, if the policy premium was $1,000 for a six month policy period, the insurer would request the policyholder to pay $250 immediately at the start of the policy period, and then for the next 5 months the policyholder would need to pay $150 per month. At the end of the 6 months, the policy has been paid for and will need to be renewed. This process would then repeat.

As mentioned, different insurers require different amounts upfront for a down payment. Instead of a percentage to be paid, some insurers take the premium and divide it into equal payments that are paid each month of the policy. This example would be the premium costing $1,000 for a six month policy period having a payment of $166.67 due each month. There does not appear to be a down payment made. Sometimes the insurer considers the first month’s payment to be the down payment and will require that to be paid once the contract begins.

Contract Length
Insurance policies come in varying lengths, such as 3 months, 6 months, 12 months and even 18 months are sometimes available. When drivers pay monthly instead of paying in full, they are not altering the length of their contract or turning it into a month to month contract. The contract length will still apply. If the policyholder needs to cancel the policy because they are moving out of state or have found another provider, they can contact their insurer and stop making those payments. For those people who pay the premium upfront, they will be reimbursed the remaining cost of the policy period when they cancel and switch.

Missed Payments
If the policyholder misses a payment, the insurer will first send a notice stating the payment was missed and it will need to be made by a certain stated date. This is known as a grace period. If payment is not made by that date or the policyholder does not contact the insurer by then, the policy will be terminated by the insurer and the policyholder will no longer have insurance. As long as the payment is made on time or before the grace period ends, the insurance will stay intact and the driver(s) and vehicle(s) on the policy will remain covered.

Fees
Drivers should note that when they choose to make monthly payments over a one time payment, the insurer will charge an additional processing fee. This fee usually isn’t too much money, but over time those fees do add up. If a driver is looking to save as much money as possible, they may want to consider paying the premium once upfront where there are no processing fees. A $10 a month fee may not seem like much to some people, but to others it’s another $120 a year they could save.

Find Cheap Down Payments
The best way to find auto insurance that requires a cheap down payment is to find an insurer that offers their policies for a low price. To do that, motorists should utilize our quote comparison tool. We can show drivers what local insurers are charging their drivers for the same coverage. Locate the box asking for a zip code, enter it, and continue with the questions that follow. These ask for basic information about the driver who needs insurance, the vehicle, and the coverage the policyholder wants on the policy. Then, once those are completed and submitted, a list of quotes and companies will provided to the applicant. They can look through these quotes, find the lowest price and purchase the policy online. The cheapest price will usually offer the cheapest down payment for the policy. Or, the driver can take the list of quotes and contact each of those companies to see how they deal with down payments and how much they charge in processing fees.

Pros And Cons To Monthly Payments
As in most thing in life, there are pros and cons to making monthly payments. The biggest pro is it’s much more affordable for many drivers to make a smaller payment each month than it would be to make a large payment. A lot of drivers can’t fit that big of a bill into their monthly budget. A con to monthly payments is the fee that is added into the price. However, often this fee coupled with a low monthly payment is still more attractive to some drivers than paying the premium in full.

Also mentioned earlier was when the policyholder needs to cancel the policy because of relocating or finding a new carrier. When the policyholder is making monthly payments they will not need to wait for the remainder of the policy cost to be sent to them from the insurer like a one time payment would when canceling in the middle of the policy period.

QuoteClix.com can help drivers find no down payment or low down payment auto insurance. All drivers are expected to carry auto insurance (or another form of financial responsibility), and paying monthly helps drivers be able to afford an insurance policy for their vehicles. Even if drivers find their monthly payment to be out of their