Low Down Payment Car Insurance - 3 FAQs
Low Down Payment Car Insurance - 3 FAQs
Car insurance is not only a smart thing to buy, but it is a legal requirement in most places these days. Even if it were not a legal requirement that you purchase car insurance, it is simply a good financial investment to get insurance. After all, not having insurance can be extremely costly to you, especially if:
you cause an accident and the other party sues you for all that you are worth
you are the victim in the accident and suffer costly bodily and property damages - but the other party is not insured
Even though auto insurance is a requirement, it does not mean that you are required to spend a lot of money on auto insurance. In fact, there are ways you can go about paying less for car insurance. It is not just about which company you choose to get insured with, either. It is also about buying the right level of coverage, the right kinds of coverage, and knowing which questions to ask your insurance provider.
One particular way to save money on car insurance that many drivers look for is to pay little or no down payment. Here are answers to 3 frequently-asked-questions (FAQs) about low down payment car insurance:
1. Is the down payment the same thing as the premium?
No, the insurance premium and the down payment are two different things. The premium is the cost of your entire insurance policy, usually for either a 6-month period or a 12-month period. By contrast, the down payment is a percentage of your premium that you must pay up front to the insurer. Your monthly payments are then calculated as follows:
(Total Premium - Down Payment) / Number of Months in Period
So, the more of a down payment you can afford, the lower your monthly payments will be.
2. Do I need to pay a down payment?
Most states require a minimum down payment of 25% of the premium cost. However, if you choose to pre-pay your policy in full, you will not need to pay a down payment at all.
3. What are the benefits of pre-paying in full?
If you choose to pay for your entire period (usually 6 or 12 months) of insurance in advance, you can often be eligible for up to a 10% to 30% or more discount on your policy. That is big savings and definitely worth considering.
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