Auto insurance installment payments

[hdporter]

So, if I talk about an auto insurance ripoff, I don't think anyone is going to jump out of their chair and cry, "OMG!"

 

Still, when I ran the numbers on my recent Geico 6-mo renewal, my eyes just about popped out of my head ...

 

We insure 3 vehicles with original cost of about $50k ea, model tears 2020, 2011, 2006.  We carry hefty limits on liability, etc.  (No coll. on the '06).

 

Our 6 mo pay-in-full premium is $2071.  (That's up from about $1300 a year ago.)

 

Now, I may have inadvertently switched my payment plan at some point, because I was billed on a 4 pay plan at $2321.  (I had to call for a pay in full quote and wait a day to schedule payment.)

 

So a little envelope arithmetic suggests that if you were instead to run the premium through a credit card and pay in a similar manner, the card must have an APR of 80%+ for $250 in interest to accrue in just 3 mo. (Remember, the first 25% installment is due on Day 1 of the policy term.)

 

If you should go with the installment pay option on your policy, consider the numbers and possibly pay with a credit card you don't otherwise use for PIF charges each month.  (You get cb/pts to boot).

 

Of course, better yet, pop 1/12 of your annual premium aside each month in a savings account and avoid the finance charges altogether.

 

(Not suggesting I'm offering up sage advice here; but I really had no idea of the magnitude of the eff. Int rate charged on Geico's monthly installment plan!)

[MarvBear]

I am afraid to drop full coverage, I recently got a quote from AAA which would essentially be $365.00 monthly vs. what I pay now at $140.00.

[hdporter]

12 hours ago, MarvBear said:

I am afraid to drop full coverage, I recently got a quote from AAA which would essentially be $365.00 monthly vs. what I pay now at $140.00.

 

To be clear, I referenced dropping collision only on the '06 Lincoln, which while I value it at $8k, based upon condition and an easily expected 50k add'l life (say 6-8 yrs at our use rate), likely has an ACV  of less than $2k.  (Plus, the crux of my post was to suggest the installment premium option on an auto policy is likely a terrible financial choice vs alternatives.)

 

Not sure if that's pertinent to your feedback or not.  I strongly value your feedback, but I need an explanation this time.  (BTW, I'm more than a little anxious today and have been an emotional freak ... I may just be "out of it"!)

Edited January 31, 2024 by hdporter

[MarvBear]

Your finance example was what made me post that.  The genuinely nice lady from AAA told me never to do it monthly because the interest rate is horrid.  So, I just had her give me a PIF cost and I broke it out sans interest on a month-to-month basis.   Didn't mean to confuse you.  I even have one of those things in my car that tells them how I drive.

[hdporter]

It doesn't help that my brain has restricted me to a very thin channel of input.  I'm just "this" close to preceding every statement/question with an ELI5 request!

 

So, at the risk of poking the bear, what were you specifically noting when you wrote "afraid to drop full coverage".

 

As a means to increase savings? 🙀

[MarvBear]

Well, if I were to have an accident not involving another car, I would want my vehicle repaired.  If I don't have full coverage, then I don't think that would happen.  The vehicle I have now will be the last vehicle I will ever own.  I was trying to save money by reducing my costs, Appears I can't lower the rates without giving up some coverage(s).  It's so blasted expensive.