Our bi-annual car insurance renewal occurred on December 15. This time around I did something different: I paid the entire balance up front. The timing, in the midst of Christmas shopping season, of the premium was not very convenient, but with a little planning and some savings, paying your entire car insurance can save you money and give you a rate of return that banks can’t offer.
Look at the math: I paid $408.04 on December 15, 2009. I would have paid $74.02 per month for 6 months, totaling $444.12. This alone is a savings of $36.08. Just as important, I am receiving a yearly Return on Investment (ROI) of 17.68%. Compare that to my current ROI of 1.25% at ING in my savings account and I come out on top by a net return of 16.43%. Until my bank can match the 17.68% return, I will continue to pay up front.
By the way, if you are wondering why our payment is so low for two cars, you need to see our cars. I will save that story for a later post.
You can apply your situation (not to be confused “The Situation” on Jersey Shore) by using the Auto Insurance Premium Worksheet. Auto Insurance Premiums
Moving forward, I have set up a new account at www.ingdirect.com and have set up an automatic transfer for $68.00 a month. When the policy expires, I will pay out that full amount and repeat the process every six months.
