Jessica Sautter has a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around auto insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Reviewed by Natasha McLachlan
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UPDATED: Oct 1, 2020

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Being 18-years-old and paying for your own car insurance can be difficult, especially if you do not have a substantial source of income. This is because 18-year-olds are part of the high-risk driving group insurance companies charge higher rates since they are more likely to get into auto accidents.

However, there is a belief that paying by the month makes car insurance more affordable for this group of high-risk drivers.

What are Monthly Payments?

Car insurance consists of coverage for six months which is usually paid in one payment. However, you can break the payments up into six separate payments due at the beginning of each month. There is an interest charge for this method which is included in the first month’s payment. The reasoning behind monthly payments is that they are easier for those living paycheck to paycheck to afford, but does that make them the best way to pay for car insurance?

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Pros & Cons

The obvious advantage to monthly payments is you only have to pay one-sixth of the amount of the total insurance cost each month, save for the first one where the interest is included.

This advantage offers those who do not have the ability to save up for car insurance to pay it off a little at a time.

Predictable: Except for the first month, you will pay the same amount each month for your car insurance. This predictability makes it easier to plan for in your budget.

Establishes Credit with Insurance Agency: By paying once per month over time, you become less of a risk in the eyes of the insurance company. Combine that with a good driving record and you may see a reduction in your payments after a year or two.

However, despite the advantages of paying once per month, there are some disadvantages as well which makes this method not the most desirable.

The most obvious is that you are paying more for your car insurance because of the added interest. It’s like you are paying for an extra month that you are not using.

It’s generally better to save up for the total amount and then put back enough money each month so you can pay the full amount next month.

How to Reduce Rates?

There are ways in which you can reduce the amount that you pay each month. The most prominent is maintaining a good driving record because even one accident can raise your rates. However, there are other methods available as well.

  • Pay State Minimum for Insurance
  • Raise the Deductible
  • Take an Approved Driving Course
  • Bundle Auto with Other Insurance Payments

Using any one of these methods will reduce the amount that you pay the insurance company. For 18-year-olds who are looking to pay less, the best advice is to pay all six months at once and use one or more methods to reduce the amount that you pay.

Keep in mind that until you reach the age of 26, you will be considered in the high-risk group of drivers.