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A down payment on car insurance?

By Posted : 06/22/2015

Every car insurance policy requires a down payment or a first month's payment to begin coverage.

The size of the down payment and the payment options your company offers can be very different, depending on where you live, your credit and driving history and how long you've been a customer.

Most companies accept multiple forms of payment as well. It's important to choose payment options wisely, as this is one payment where you simply must pay on time.

Car insurance payment options

Depending upon your car insurance company, you may be able to pay in person, over the phone, by going online or through a mobile app.

The types of payment accepted vary, too, but typically include:

  • Check or money order
  • Bank bill pay
  • Electronic funds transfer (EFT) – automatic online payment
  • Credit card
  • Debit card

The way in which you buy your car insurance may limit your payment method. 

For instance, if you buy online with an insurer that doesn’t have an office in your area, then you won’t be able to pay in person.   You need to pick the payment method that is best suited for your lifestyle so that you’ll be able to pay on time. There are no grace periods for car insurance bills.  (See “When you forget to pay the car insurance bill.”)

Down payments on car insurance

Your payment schedule will depend on how much you can pay at once for your car insurance. 

The best option is to pay your policy in full up front, which comes with the bonus of receiving a “paid in full” discount that can be 5 to 10 percent.

If you can’t afford to pay for the whole policy at once, you’ll need to set up a payment plan. As part of a payment plan you will need to:

  • Make a down payment (typically runs from 8 to 33 percent of your total policy premium).
  • Set up a payment plan.
  • Be prepared to pay an installment fee (typically between $3 to $10 per payment)

Over a year, if you pay monthly, fees can quickly add up.


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