Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Nov 29, 2021

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Just What's Essential

  • It is not bad to pay monthly car insurance instead of in full
  • Setting up automatic payments could earn you a slight car insurance discount
  • Some companies charge processing fees if you pay for car insurance monthly

The cost of car insurance can overwhelm some drivers. But is it bad to pay monthly car insurance instead of in full? Paying your bill monthly leads to more manageable, affordable car insurance for many people.

However, there are pros and cons to paying your car insurance quotes monthly instead of in full. Below, learn some tips to help you determine if paying car insurance in full or monthly installments works better for you.

After learning about paying a car insurance company monthly instead of in full, remember to enter your ZIP code into our free rate tool above to compare quotes from the best companies near you.

Is it bad to pay monthly car insurance instead of in full?

Some drivers wonder, “Should I pay car insurance in full instead of in monthly installments?” Both monthly billing cycles and paying upfront are viable, appropriate ways to pay for car insurance.

Car insurance is legally required in most states. According to the Insurance Information Institute (III), penalties for getting caught driving without it include fees of up to $5,000 and possible jail time.

So insurance companies provide different billing cycles to customers to ensure that as many drivers as possible can afford to pay for their coverage.

You should choose a payment plan that best fits your budget.

What does it mean to pay for car insurance monthly? Your policy is broken up into six or 12 smaller monthly bills that you pay on an agreed-upon date each month until your policy renewal date.

You’re covered by your insurance each month you make a payment on time. But a late payment could lead to the cancellation of your coverage.

What does it mean when your auto policy is paid in full? You’re paying for the entire policy term in one lump sum at the beginning of the term period.

You are covered until the policy is up for renewal. Usually, it’s a six-month policy. But some companies will sell you 12-month policies.

Remember to also look at different car insurance discounts companies offer when deciding what billing cycle works best for you.

Different car insurance companies offer varying levels of discounts for full payments, electronic payments, paperless documents, and setting up automatic billing.

Understand that some discounts are earnable regardless of whether you pay car insurance in full or monthly, like setting up paperless documents.

To find the best coverage for you, compare quotes from multiple companies online.

Then ask about what discounts you’re eligible for by setting up monthly installments versus paying in full.

Enter your ZIP code below to view companies that have cheap auto insurance rates.

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What are the pros and cons of paying for car insurance monthly?

Let’s compare the pros and cons of paying car insurance monthly. One of the major pros of a monthly car insurance billing cycle is the cost.

Paying for your car insurance rates monthly instead of in full divides your full policy cost into six or 12 smaller charges.

So, the amount you owe each billing cycle is lower than the full cost of the policy.

Therefore, monthly car insurance payments are ideal for drivers on a budget.

Monthly car insurance payments are also beneficial if you plan on making any significant changes to your policy.

For example, young drivers’ car insurance usually costs more than average. If you remove your teen driver from your policy, you’ll see a reduction in your costs at your next monthly billing cycle.

If you set up automatic billing with your insurance company, you could earn an automatic billing discount. But the rate reduction is typically small, averaging around 3%.

This deal may also be referred to as a paperless billing discount by some companies.

See what insurance companies offer automatic billing discounts to drivers paying for car insurance monthly in the table below.

Automatic Billing Car Insurance Discount Offered by Company
CompaniesAutomatic Billing Car Insurance Discount Offered
21st CenturyYes - 3%
AAANo
AllstateYes
American FamilyYes
AmeripriseNo
AmicaYes
Country FinancialNo
EsuranceYes
FarmersYes
GEICONo
Liberty MutualYes
MetLifeYes
NationwideYes
ProgressiveYes
Safe AutoYes
SafecoYes
State FarmYes
The GeneralYes
The HanoverYes
The HartfordYes
TravelersYes - 2-3%
USAAYes

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However, a potential con to paying for affordable car insurance monthly instead of in full are the processing fees.

What is an installment fee for car insurance? It’s a small additional charge added to your bill to account for the processing costs.

Your company might charge an additional fee each month because of the extra work processing the six to 12 payments throughout your policy term.

But some companies, including The General and The Hanover, actually waive your processing fees if you set up automatic payments instead of rewarding you with a discount.

What are the pros and cons of paying for car insurance in full?

If it fits your budget, paying car insurance in full versus monthly typically leads to slightly cheaper overall costs.

One major pro is that you aren’t charged monthly processing fees, saving you around $10 to $30 annually.

Similarly, a car insurance policy paid in full sometimes qualifies you for a full payment discount. The rate reduction is slightly higher than what automatic payment discounts earn, averaging closer to 7.5%.

In the table below, see what major car insurance companies offer this deal to customers.

Full Payment Car Insurance Discount Offered by Company
CompaniesFull Payment Car Insurance Discount Offered
21st CenturyNo
AAAYes
AllstateYes
American FamilyYes
Ameriprise (Connect)Yes
AmicaYes
Country FinancialYes
EsuranceYes
FarmersYes
GeicoYes
Liberty MutualYes
MetLifeNo
NationwideNo
ProgressiveYes
Safe AutoYes
SafecoYes
State FarmNo
The GeneralYes
The HanoverYes
The HartfordYes
TravelersYes - 7.5%
USAANo

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Plus, you may still qualify for a paperless billing discount if you pay for your entire policy upfront, leading to even more savings.

You also don’t need to worry about your coverage lapsing if you pay in full, as you are at zero risk of missing a payment throughout the life of your car insurance policy.

However, paying for car insurance upfront may be unreasonable for some budgets.

Also, if you move states or switch companies, it may take weeks for you to get reimbursed for the unused parts of your policy.

The Bottom Line: Is it bad to pay monthly car insurance instead of in full?

It is not bad to pay monthly car insurance instead of in full. But it is also not bad to pay for car insurance in full instead of monthly. So you should choose whatever fits your budget.

But if you’re on the fence between monthly payments or an in-full payment, compare quoted rates, available discounts, and any processing fees from multiple companies to find the cheapest coverage for you.

Now that you’re prepared to decide whether to ​​buy car insurance monthly instead of in full, compare quotes from the best companies near you by entering your ZIP code into our free rate tool below.