There are different types of car insurance products in the market. Many car insurance products are aimed at people on budget. One example is the no-down-payment auto insurance. Insurers, generally, ask clients to provide down payment for the insurance product they sign up for. Take your time deciding before you opt for the no-down-payment option. In some cases, the no-down-payment insurance proves to be more expensive than the standard auto insurance.
No-down-payment car insurance allows drivers and car owners to obtain insurance for their cars without paying anything at first. The arrangement is you pay on an installment basis, which involves monthly payments. The entire cost of the insurance product is broken down to 12 months of payment. For people with enough budget, they can pay the entire one-year amount. Doing so saves them the hassle of making monthly payments. Also, one-time payment is cheaper than the sum of all installment payments of the no-down-payment counterpart, because the insurance firm will do less administrative work in processing your payment.
The thing is, the whole cost of an insurance product is overwhelming for many people. Insurance companies have devised a clever method of helping customers with tough budget to pay their car insurance. No-down-payment insurance may seem friendly, because of the seemingly lower payment. You can pay small amounts for the insurance over a stretch of 12 months. For many people, this kind of arrangement is more manageable, especially for working professionals receiving paycheck each month. They no longer have to deal with large one-off payment.
All right, the disadvantage is often realized by the end of the year, when one realizes the difference between the standard amount of the insurance product and the sum of the payments he has been paying for 12 months. If you make your calculations, the difference can actually be staggering. Insurance on installment payment basis is exempt from discounts. Furthermore, insurers add interest to the actual insurance cost, driving the payments up in the long run. You dont notice it at first though.
Keep in mind that no-down-payment auto insurance binds you in a contract. The stipulations of the contract vary among insurers. Usually, non-payment means forfeiture of the insurance. As long as you meet your payment obligations, you should be fine. There are different types of no-down-payment insurance arrangements. Some firms commit you to six-month insurance policyso you would have to pay for six months. Other companies charge you on a monthly basis without any specified term, so you can discontinue anytime. Because of these differences, you must read details about the insurance policy before signing up.
Many people opt for no-down-payment insurance while looking for favorable policies. The alternative is short term insurance. Again, make sure what coverage you get. Read the terms and conditions of the insurance policy before making agreements. Do not get an auto insurance policy that does not suffice your needs no matter how it favors your finances.
By the way, do not be misled. Even no-down-payment insurance incurs initial payment before the insurance coverage becomes effective. To avoid being misled, ask questions to the insurer.