How does car insurance in installments work?

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Do you want to free yourself from the obligation to pay the third-party liability policy in a single installment or every six months, but you don’t know where to start? By choosing car insurance in installments you can pay the annual premium in convenient monthly installments and no longer have problems managing your expenses.

  • Understanding what installment insurance is and how it works is important to identify the solution that best suits your needs. To help you with your choice, we have developed this guide that collects all the most important information on the subject. 

How does car insurance in installments work

The RCA is compulsory insurance that is used to protect you, your vehicle, and any passengers in the event of a road accident. So far, everything is clear.

When you activate an insurance policy for your car or motorbike, you can choose whether to pay in a single solution, every six months or in installments. The installment is for you if you prefer to divide the annual premium into several installments. 

The car insurance policy in installments provides for the periodic payment of a fixed amount, including any interest and additional costs. This allows you to burden your personal and family budget to a lesser extent.

To activate an insurance contract with payment in installments, you can contact an insurance company or a finance company. What is the difference? Insurance companies sell the product directly to the customer, while financial companies, acting as intermediaries, grant the customer a cash loan to pay for the insurance. Specifically, the finance company, immediately after the coverage is activated, pays the insurance company.

Generally, insurance companies and financial companies are more likely to activate installment insurance for those who demonstrate a fixed monthly income. If you are interested in this insurance coverage formula, therefore, you must present a guarantee : 

  • permanent employment contract if you are an employee;
  • tax return if you are self-employed. 

This step is essential to demonstrate to the insurance company or finance company that you can support the periodic payment of the policy. However, sometimes even those who do not demonstrate a fixed income can have access to installment insurance if the insurance company or the finance company takes the risk of activating an uncovered loan.

Car insurance in installments VS temporary insurance

Monthly car insurance is often confused with temporary insurance. In reality, these are two different insurance solutions. 

The installment car policy is valid for one year and offers insurance coverage for 12 months, while the temporary insurance has a validity limited to the period for which it is requested and paid for.

Also referred to as “temporary insurance”, the temporary policy is ideal to activate if you need insurance coverage for only a few days (three or five) or for a few months (three or six). This is a rather expensive alternative: to be avoided if your intention is to save on car or motorcycle insurance!

Instead, we recommend that you activate car insurance in monthly installments if you need to dilute the payment of the policy in several installments. In this case, it is good to specify that additional costs and interest must often be included in the monthly fee of the car insurance in installments.

Insurance in installments for cars and motorcycles: pros and cons

Are you wondering why to take out monthly car insurance? Here are the main points in favor :

The main advantage you can derive from it is the payment in installments of the amount due, and therefore the possibility of avoiding substantial expenses on an annual or semi-annual basis. 

Another point in favor is the possibility of suspending the insurance coverage: this is allowed only with annual policies, even if paid in installments, but not with temporary insurance.

Finally, it is worth mentioning a very important issue, namely that of interest and additional costs. Sometimes insurance companies and finance companies offer zero-rate monthly insurance. This means that the amount of money you have to repay is not increased by interest, but corresponds exactly to the amount of credit you have received, divided by the number of pre-established installments. 

Attention, however: more often it happens that the deferral of the payment corresponds to an interest rate. The latter varies according to the entity granting the loan and, in some cases, it can be very high, canceling any convenience.

Did monthly pay insurance: how to pay?

Depending on the case, you will have to pay the amount of the car insurance in monthly installments directly to the insurance company with which you entered into the contract or to the financial company that granted you the loan.

The payment methods are numerous and vary depending on the insurance or financial company you choose to contact. Among these, the most common are:

  • automatic debit on the credit or prepaid card: the sum is withdrawn directly from the card;
  • bank transfer: to be made online or by physically contacting your bank counter.

If you received credit from a financial company to activate the car insurance in installments, you can pay off the debt at variable time intervals. In other words, you will not necessarily have to repay the amount monthly: the conditions vary depending on the financial company with which you have signed the loan.

How to choose the best installment insurance

If you are looking for the best installment insurance to subscribe for your car or motorcycle, we recommend that you carefully analyze all the solutions available on the market, so as to have a complete overview and make an informed choice. Here are some factors to consider:

  • value for money: considering only the cost of the policy is not enough. It is important to pay attention to the coverage included in the insurance and to the presence of any limits or constraints;
  • accessory coverage: traditional Motor TPL insurance is flanked by a wide range of accessory coverage designed specifically to ensure greater protection for drivers and any passengers in the insured vehicle;
  • payment methods: we advise you to pay attention to the payment method of the policy, so as to choose the type of insurance most in line with your needs;
  • reviews: when the choice of car insurance in installments is a complex operation, the experience of other consumers is a valid help to orient themselves among the numerous solutions available.

If you are looking for a quick and easy way to compare the main policies and what they include, then we recommend that you calculate a quote with us at Switch 

Insurance in monthly installments without a payslip

As already mentioned, you can activate monthly installment insurance if you have the possibility to prove to the insurance company or financial company you are contacting that you have fixed monthly income, by presenting a payslip or a tax return.

However, some insurance companies offer the possibility of activating car insurance in monthly installments even in the absence of a paycheck.

If you do not have a fixed income or you cannot prove that you have it, you can still activate an auto insurance policy in installments, as long as certain conditions are met.

In most cases, this happens if you are a loyal customer of the insurance company and the latter acts as a guarantor. The same situation can occur with lenders who know your economic situation in-depth, i.e. your income and/or your overall income.

RC policy in installments without financing

If you prefer not to go through a finance company, know that there are several insurance companies that allow you to activate car insurance in installments without financing. In these cases, the amount to be paid is directly charged to your credit card at each expiration. 

But be careful: very often, installment insurance without financing provides for a slight increase in the policy.

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