So I was talking to a few of my friends, and everyone was comparing car insurance rates with their varying circumstances in life. One of the points of discussion was around paying in full vs. paying monthly, and I learned that the VAST majority of my friends are just paying this thing monthly either via auto-draft or auto-credit card payment.
I just received my renewal offer for my car insurance, which I always pay in full because I know there is a discount for doing so. What I didn't realize is that the discount is as large as it is (never paid attention to actual discount because a discount is a discount for something like this, even if its just like $50). I just got the offer from Progressive for $1523 over 6 months for my 2 vehicles if paid in monthly installments, but the pay in full offer is $1190. That is a $333 difference, which is a ~22% discount. In other terms, by paying in monthly installments, I would effectively be paying 22% interest over 6 months. That's on par with or worse than credit card debt.
At that rate, this is something you should consider dipping into your e-fund to take care of when it comes up if you haven't prepared for it, and use the next couple of months to save extra hard to rebuild the fund and make sure you can pay in full at the next renewal.
Also - last but not least, always reshop your policy at renewal or every other renewal at a minimum. It takes less than 30 minutes to hit all the major carriers and you'll probably save money.
Submitted August 21, 2018 at 09:19AM by np20412 https://ift.tt/2MEGFEY
