5 innocent ways to drive up car insurance

Paying car insurance in installments
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Choosing monthly, quarterly or semiannual options to pay your car insurance bill may seem convenient, but the choice can cost you more money because of installment fees, Ohman says.

Many consumers don't view the expense as a fee. Auto insurance companies list the charge as the norm while offering a "discount" to payers who pay everything upfront, says Ohman.

"It's a bit tricky to think of it as an extra charge when you pay by installments, but the fact is, if you aren't able to prepay your premium, you will probably end up paying more over the term," he says.

According to Luedke, there are administrative costs involved when car insurance companies receive several smaller payments. The costs are passed on to the policyholder as an installment fee.

The charge is typically less than $5 per installment. However, under a monthly plan, when the consumer pays the installment fee 12 times per year, the extra charges can add up, says Ohman.




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