Jumat, 20 April 2012

No Down Payment Car Insurance: Does It Benefit You?

There are different types of car insurance packages on the market. Many of these products are aimed at clients on a budget. One example is the no down payment auto insurance. Insurers may ask customers to provide a down payment for the insurance product they buy. Before taking the no down payment option, take the time to look at grand totals of both options. In some cases, the no money down insurance may prove to be more expensive than standard auto insurance.
No down payment car insurance allows drivers and car owners to obtain insurance for their cars without any initial payments. The arrangement is that you pay via installments, typically meaning monthly payments. The entire cost of the insurance product is broken down to 12 months of payment. When customers have a large enough budget, they can pay the entire year of insurance in advanced. Doing so not only saves them the hassle of making monthly payments, but a one-time payment costs less than the sum of 12 monthly installments of the no down payment counterpart. Insurance companies explain the differences in these totals as they do less administrative work in processing a lump sum yearly payment.
For many people, absorbing the yearly cost of an insurance product in one shot is overwhelming. Insurance companies have devised an alternative method of helping customers with strict budgets to pay their car insurance, which is beneficial for both the company and the client. No down payment insurance seems friendly because of the small monthly payments that stretch over the year. For many people, especially working professionals receiving a monthly salary, this kind of arrangement is more manageable. They no longer have to deal with a large lump sum payment.
The disadvantage is often realized by the end of the year, when one looks at the total sum of payments throughout the year and compares it to the standard amount of an insurance product. By making comparative calculations, the difference can actually be staggering. Insurance on an installment basis is exempt from deals, coupons and discounts. Furthermore, insurers add interest to monthly installments, driving up the payments in the long run, which you might not notice at first.
Keep in mind that no down payment auto insurance binds you in a contract. The stipulations of the contract vary among the providers. Usually, late or missing payments mean forfeiture of the insurance. This is avoidable as long as you meet your payment obligations. There are different types of no money down insurance arrangements. Some firms commit you to a six-month insurance policy, locking you in for at least six months. Other companies charge you on a monthly basis without any specified term, so you can discontinue anytime. These subtle differences may not be fully explained to you the moment you sign on the dotted line, so you must read and understand the insurance policy details before signing up.
Many people who require immediate insurance opt for no down payment insurance while looking for other favorable policies. Short term insurance may be ideal for this type of situation. Again, be sure to read the terms and conditions of the policy before making agreements. You do not want to be stuck with an auto insurance policy that does not meet your needs and that you cannot cancel.
Even no down payment insurance may require an initial payment before the insurance coverage becomes effective. It is important not to be misled, so feel free to ask questions to the insurer.