When buying a car insurance policy you usually have two options for the payment. You can pay for the policy outright or you can enter into a credit agreement with the insurer or their financing company. Both options have there benefits and downsides and it is usually the individuals own circumstances that dictates the method of payment.
If you pay for the policy upfront then you sometimes get a discount or at the very least not have any additional costs other than for the policy itself. Obviously not everyone can afford to pay for a full years worth of car insurance all at once but if you can afford it this is generally the best option.
If you can't afford to pay for your policy in one go then the insurer will usually allow you to pay monthly for your car insurance. In most cases if you choose this option you are generally required to pay a deposit due to the way the finance agreement works. The amount will depend on your total policy cost but is generally the equivalent to 1 or 2 months worth of premiums. In addition to this as it requires additional administration to arrange the finance and process the monthly payments the insurer may charge an additional monthly admin charge. Finally there is usually some sort of finance or interest charge on this type of monthly payment agreement.
Due to the way financing agreements work there is usually a deposit to pay. If however you have chosen the insurers monthly payment option because of the affordability issues then you may also find the deposit a problem. An alternative to getting a financed annual policy is to instead use a monthly pay as you go insurance policy.
Pay as you go or monthly car insurance is a way to get insured for a month at a time. It only requires a 1 month minimum commitment so it is more flexible than an annual policy. So instead of buying a year worth of insurance and paying for it on a finance agreement that requires a deposit you are just getting a months worth of car insurance at a time. As there is no financing involved there is no need for a deposit. Instead you just pay a fixed monthly amount until you choose to cancel the policy.
Not every insurer offers this type of policy. Insurers such as eCar insurance have specialised in this type of short term insurance and so can provide monthly no deposit insurance on a pay as you go basis.
You can get a quote just like you would for an annual policy by providing the same sort of details about yourself and the car you want insured. Once you are happy with the quote a monthly payment instruction is set up in order to pay for the policy. Every month the fixed monthly payment will be made from your bank account.
You can take out this type of car insurance for as little as just one month. After 8 months if you have not made a claim then you will earn an extra year no claim bonus that will further reduce the cost of your policy. This is especially useful if you are a young driver trying to build up your no claims.
