Auto insurance is a necessity if you're planning to drive, but coming up with the full premium for six or twelve months can be a significant barrier to getting your car on the road. Luckily, many insurance providers offer appealing terms with low down payment auto insurance that allow you to get behind the wheel of your car much sooner. There are some pros and cons of opting for low down payment auto insurance, though.
How It Usually Works
Traditionally, when you buy car insurance, you sign a contract with the insurance provider to insure your vehicle for a chunk of time - usually six months or twelve months. Technically, you are immediately liable for the full amount of the premiums for the entire length of the contract. In many cases, the policy holder - that's you - pays the entire policy premium in advance, or puts down up to 50 percent of the premium for the entire period and pays the rest in one or two payments. While that may be a reasonable option for someone with a healthy savings account, it may be difficult for many new car owners to come up with several hundred dollars at once to pay the entire premium up front, or even to pay a significant portion of your annual insurance premium at once. That's where a low down payment auto insurance - or even no down payment auto insurance - policy comes in handy.
Low Down Payment Car Insurance with Monthly Payments
Most companies offer an option to get car insurance with no down payment or with a very low down payment. These policies are designed for customers who can't afford to pay for an entire year's worth of insurance up front, or who prefer to pay in monthly installments. In those cases, the insurance company simply divides up the entire premium into six or twelve equal payments, depending on the number of months the policy will be in force. Other companies may offer no down payment car insurance to get you on the road, then spread the premium over several installments coming due at specified periods.
Pros of Low Down Payment Car Insurance
Obviously, the biggest pro of a no down payment car insurance policy or low down payment auto insurance is that you don't have to come up with the cash up front. If you're having cash flow problems or have little in the way of savings, the option for auto insurance with no down payment can be a make or break issue. For others, the decision to pay off car insurance in installments just makes better financial sense because it keeps their money in their pockets until the payment actually comes due.
Trade-offs for Low Down Payment Car Insurance
A new trend among auto insurers is offering low down payment auto insurance only to those who authorize EFT withdrawals to pay their installments. This provides a layer of protection for the insurance company, which can submit the EFT request when your payment is due rather than hoping that you remember to send the check.
The biggest con against low down payment car insurance with monthly installment payments is that you may be giving up a significant discount on your premiums, because many insurance companies offer 10 percent or more off your premiums if you pay for your policy all at once. Shop around for an auto insurance company that offers a discount if you authorize EFT payments, though, and you can pick up that discount and still get low down payment auto insurance.
Author Resource:
Chris Robertson is an author of Majon International, one of the world's MOST popular internet marketing companies on the web.
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