Monthly or Annual Payment

Most insurance companies in Australia give you the choice of paying your car premium either monthly, quarterly or annually. The choice between these two kinds of options primarily depends on your financial condition. If you are comfortable paying the insurance premium for the whole year in one installment, that is the cheapest option. Most companies that give you the option to pay monthly or quarterly, charge some extra amount over and above your annual charge. But the advantage of monthly payment is that at no point of time, you feel the pinch of a substantial amount withdrawn from your account. Paying in small monthly installment may be quite convenient for some people. 

In an annual payment, there is a saving as compared to the monthly payment because of discount given by the company for making the payment of the premium at one go at the beginning of the year to which the policy applies. But there is a loss of interest that this money could have earned, had you kept this money in your bank account or invested somewhere. Unless you have the potential to earn some really high return from your investment, the insurance company fixers the monthly equivalent premium such that there is an overall saving in the annual payment option. However, these days a new concept has come in the market that gives the monthly payment option without any extra charge as compared to the annual charge, and then there are some credit card companies that extend a 0% plan for purchase made over a period of 12 months that can be used to finance the car premium.