| By Alevoor Rajagopal
Department of Insurance rules require all automobile
insurance companies to accept premium payments
in installments. However, some insurers offer
the installment payment plans through their
associate finance companies in which case you
are generally forced to pay high rates of interest.
Clearly, shopping for car insurance smart infers
that you shouldn't just seek and settle for
low rates but also do your math on identifying
low-cost financing. You can do this by simply
asking who is providing your installment plan.
There are insurance companies that proudly offer
their own equated monthly payment plans. Whatever
that be, make sure of things such as the outright
down payment, the number of installments, interest
charges, service charges, if there are any hidden
charges and the final amount of monthly installment.
But before you get insurance quotes with installment
payment plan from any company, make sure you
get everything about the plan in clear writing.
Asking for payment break-ups in writing is
a way of committing the insurers to freeze your
installments for the entire term of validity
of the policy. Usually, when you do so, all
possible charges which the agents had deliberately
hidden till then will have to surface up which
is to your advantage. Also you will not be in
shock when you receive the bill later.
In the present market, all auto insurers and
finance companies have their terms at least
as good as follows:
* For a policy of one year's validity, the
down payment will be 16.67% and ten (10) equal
installments payable monthly. If you have your
policy written through associations recognized
by companies, then the down payment will be
20% of the total.
* On similar lines a six-month policy will
require a down payment of 33.33%, and four equal
payments payable monthly.
While the above is the stipulation, some insurers
and finance companies are willing to offer smaller
than what is stipulated down payment and are
not so rigid on the term side too. However,
an insurance company is at right to add a service
charge to your payment, but make sure everything
is crystal clear in black and white before you
sign on the dotted line. Here is an indication
of the basic service charge that can be levied
- $3 per month, and the company is also at its
legal liberty to add 50 cents for every $250
(or fraction) of premium paid over $500.
Alevoor Rajagopal, MBA, a business consultant,
voices for fair practices in used car deals.
He also writes passionately on showcasing individuality
with MySpace layout. Visit his blog on online
income tips.
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