Low Or No Down Payment Monthly Insurance - Insurance Articles and ...

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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.

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