Car Insurance Pay Monthly or Annually? Which is better?

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There is no doubt that the car insurance rates in Ontario are one of the highest in the country. It is important to choose a method that works for you when making your car insurance payments. You may have to decide on the payment method that fits your budget and needs. Let us check out the different payment methods that can be used to make car insurance payments in Ontario.

You may write a cheque, money order, online or cash payment to pay for car premiums. If you choose to pay with your credit card, it may help you to build some credit too. You may also set up a direct debit instruction with your bank. Bundling your car insurance premiums with other payments such as home insurance may help you save some money. You may get a multi-policy discount too.

Car Insurance Payment Yearly Versus Monthly

Until a few years ago there were only two options of payment methods of car insurance payment. They were either semimonthly or annually. Today there are other options available to pay as well. Depending on various factors, the decision to pay car insurance monthly or annually is specific to each person. Yearly and monthly payments methods have their own pros and cons as follows:

Features of Yearly Payments

  • You may have to make a payment once a year and forget about it until next renewal.
  • There are lesser hassles when you pay annually since you do not have to remember each month.
  • The chances getting a late fee charge is minimal.
  • You may enjoy a greater discount for paying annually.
  • The downside could be you may not be able to afford an annual lump sum payment.
  • In case you want to cancel the policy, you may pay more cancellation fee.

Features of Monthly Payments

  • You can pay small installments each month at your own comfort without tweaking the budget much.
  • This payment method helps those who do not have a sizeable savings and spend live month to month.
  • Another consideration could be if you have plans to move abroad or elsewhere and would like to cancel your policy. You may deal with less hassle if you were paying monthly.
  • The downside could be that you may forget to arrange for the insurance payments each month. You may end paying a late fee quite often.
  • Or you may not have enough funds to honor the monthly payment and get charged a penalty.
  • If for any reason you miss a lot of monthly payments this could prove harmful. Your policy may lapse for not paying premiums over a time. This will also give a reason to the insurance companies to increase your premiums at the next renewal.[1]

Can I Pay Car Insurance Quarterly?

Credit Cards

You may decide to pay your car insurance premiums quarterly rather than annually or monthly. There are many insurance companies who allow paying the car premiums quarterly. This will allow you to allocate your budget for every three months towards insurance. There is a lesser chance of you missing payments when compared to monthly mode. Also, you may not have to put down a huge chunk of your savings as you do for the annual mode. Thus you may take an informed decision by weighing in all the factors specific to your situation when you choose a car insurance payment method.

[1] https://www.fsco.gov.on.ca/en/auto/brochures/Pages/brochure_autoins.aspx#a2

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