Tip for Saving on Car Insurance

Even after finding the best deal on car insurance, you can still continue to save money. Most people I know pay their car insurance monthly, and that can cost more.

We get our car insurance through Progressive, they had the best price when we were looking around. They offer us 3 different options when renewing our insurance.

Option 1: Pay entire 6 months worth at once $220.00

Option 2: Initial payment of $50.51 and monthly automatic payments a checking account for 5 installments of $40.70 = $254.01

Option 3:6 installments paid by Internet, phone or mail of $50.51 each = $303.06

Obviously, Option 1 is the best scenario to save money, but most people can’t afford to pay it at once. The insurance companies must love that, lots of free money for them, your hard-earned money.

To be able to pay our insurance in full, I have had to set-up automatic transfers to our ING account (online savings) for this.

We do better with smaller amounts, so I divide the amount we need to pay by how many business days there usually are in 6 months, and then set-up daily transfers for the amount.

Example: Let’s use 4 weeks for each month x 6 months = 24 weeks x 5 business days = 120 micro-transfers
$220.00 divided by 120 = $1.84

So, if every Monday through Friday, we have $1.84 a day sent automatically to our ING account (which I named Car Insurance Fund), then we can pay our car insurance in full and reap the savings.

How much does it save?

By paying our car insurance in full opposed to the 6 installments of $50.51, we can save:

$83.06 in 6 months
$166.12 in 1 year
$332.24 in 2 years
$830.60 in 5 years
$1,661.20 in 10 years
$2,491.80 in 15 years
$3,322.40 in 20 years

About Jen Perkins

Likes: saving money, being debt free (aside from our house), zombies, travel, getting money, blogging and dogs. Dislikes: debt, being broke, bunnies, wasting money, not having enough money to travel the world and paying interest. Facebook  ♥  Twitter  ♥  Google+  ♥  RSS


Tip for Saving on Car Insurance — 2 Comments

  1. Man I wish our car insurance was that low! Ours is like $200/month :( boo

    This is such a great idea! I love the way you do DAILY transfers. It sounds kind of fun :) Do you have all your accounts with ING or just your savings? The thing I hate is it takes 3 days for transfers between my Bank of America and my ING accounts. Oh well I’ll get used to it :)

    • Ours might be lower because we already paid off our 1 and only car, we also haven’t had any tickets or accidents before.

      I LOVE the daily transfers with ING, I have 3 different ones set-up now: car insurance, emergency fund and Christmas. :-)

      I have their savings account (with tons of sub accounts) and their checking account. Yeah, the 3 day wait can kind of suck at times. A good thing about it is that it gets you thinking about transferring money out of ING.