If you find yourself in a situation where you’re short on cash but need to get insurance for your car, you might have some options. While some insurance companies require a large upfront deposit to cover your vehicle, depending on the payment structure you decide on for the policy, there are some that don’t require it. Buy now pay later car insurance is an affordable option, but there are some important details you should know.
What Is Buy Now Pay Later Car Insurance?
Buy now pay later car insurance is a type of policy that allows you to pay your premiums monthly instead of annually or semiannually, so you can get coverage without putting out a lot of money upfront. You can get fully insured without a significant out-of-pocket expense. Once you make your first monthly payment, your insurance will be put in force.
The term “buy now pay later” can be slightly misleading because you have to pay a minimum of the first monthly premium to get the policy started, but the bulk of your payments will be later.
How Does Buy Now Pay Later Car Insurance Work?
If you decide to purchase car insurance with the monthly payment option, you’ll still have to pay the first premium installment. This initial payment will most likely be more than the rest of the payments because it covers the onboarding and processing costs associated with a new policy. This initial payment is a way to ensure that drivers are not trying to get proof of insurance without paying for it. There are some situations where a driver might need to provide proof of insurance in order to avoid penalties while registering their vehicle or to satisfy the insurance coverage requirement when they purchase a car from a dealership. The initial payment keeps drivers from canceling their policy before making any payments at all.
How To Get Buy Now Pay Later Insurance
Getting your insurance policy is as easy as making a phone call or visiting a website. Most companies offer free quotes online. You just need to provide some basic information:
- Driver’s license number
- Home address where you’ll park the car
- Year, make, and model of your car
- Type of coverage you want
- Amount of coverage
- Monthly mileage
Once you provide this information, you can get a quote and then complete the process of finalizing coverage.
What Types of Coverage Can I Get With Buy Now Pay Later Auto Insurance?
Just because you choose a monthly payment doesn’t mean you have to skimp on coverage. If you can purchase liability-only coverage to save money, it will help keep your premiums lower, but you can also carry any type of coverage you need.
Other types of coverage you can add to your plan include:
- Collision. Collision coverage helps pay for damage to your car if you hit another vehicle or an object such as a telephone pole.
- Comprehensive. Comprehensive coverage helps pay for damage to your car that’s not due to an accident. It includes theft, fire, weather damage, and vandalism.
- Uninsured/Underinsured Motorist Coverage. Uninsured or underinsured coverage helps pay for medical bills and, in some states, damage to your vehicle if you’re hit by someone who doesn’t have insurance or not enough to cover damages.
- Medical Payments. Medical payments coverage helps pay for medical costs for you and the passengers in your vehicle that are a result of an accident.
How Can I Keep My Premiums Low?
The best way to save on car insurance is to keep your premiums low. Some of the things you can do to reduce premiums and keep them low are:
Carry liability-only coverage
Liability insurance covers others if you are found at fault for an accident, but it doesn’t cover damage to your car. It is a good option if you drive an older vehicle that you can replace or repair if you get into an accident.
Increase Your Deductible
The deductible is the amount of money you pay out of your own pocket before your insurance policy pays. If you choose a low deductible, your premiums will go up, but if you increase your deductible and pay a higher out-of-pocket amount for repairs or replacement, you can reduce your premiums.
Purchase Homeowners or Rental Insurance From the Same Company
Insurance companies will provide discounts to customers who carry multiple policies. If you own a home and buy your homeowners insurance from the same provider as your auto insurance, you’ll save on both. The same goes for renter’s insurance.
Maintain A Good Driving Record
Drivers with clean driving records pay lower premiums than those with tickets and traffic violations. A good driving record makes you less of a risk, and you get rewarded with lower premiums.
Maintain a High Credit Score
Keeping your credit score high will help you keep your premiums lower. Insurance companies find that people who have good credit file fewer claims, making them less of a risk. You can keep your score high by paying your bills on time, keeping your credit balances low, and checking your score to make sure everything is accurate.
Look For Additional Discounts
As you shop around for insurance, ask about additional discounts. Many companies will give them for certain safety features on your vehicle, low annual mileage, being a long-time customer, and for student drivers with good grades.
What Are the Drawbacks of Buy Now Pay Later Car Insurance?
If you are low on cash, the option for buy now pay later car insurance might help you get the insurance you need, but it isn’t always the best choice. The biggest downside to purchasing your insurance this way is that in the long run, you’ll end up paying more. Most providers charge a fee of 5% to 10% of your premium to break down the premium into monthly payments.
What Insurance Companies Offer Buy Now Pay Later Car Insurance?
There are many different insurance companies that offer buy now pay later insurance. Some of these include:
- Allstate
- Geico
- Farmers
- Nationwide
- Progressive
- State Farm
- Safe Auto Insurance
Now that you have all the information, you can make an informed decision about purchasing buy now pay later car insurance.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.
