Everyone has seen the commercials. Low monthly payments, discounts galore, and the best rates around. It is impossible nowadays to turn on the TV, read the newspaper, or browse the Internet without encountering at least one auto insurance ad.
The promotion has gotten so intense there are even insurance companies advertising at toll booths. What better time to consider your insurance coverage than when passing through a toll in your car?
Are the Deals for Real?
The trouble is not all of these companies are as affordable as they claim. You might be lured in with a cheap introductory rate like “first month free car insurance,” but when that rate spikes, your savings could disappear. When you stretch the discount over the course of your policy, you realize you are really saving nothing. As a matter of fact, you might even be paying more.
Take this example of first month free car insurance. At first, this seems like a great deal. You get coverage and you are not obligated to pay anything for at least 30 days. This is especially for those in an emergency situation where they need coverage fast. You can hop over to the new company and not worry about payment for a month. Unfortunately, this can cost you a lot in the long run.
Say the average cost of a policy for you and your vehicle is $1000. You find a company willing to offer you the first month of a six month policy for free. Your remaining five months of payments are $250 per month. This sounds like a good deal, but a brief calculation reveals you ultimately pay $1250 for your entire policy. You end up paying more than you would if you received nothing for free!
Why It Works
This is a trick used by retailers all the time. Consumers see the word “free” and get excited. Even if they end up paying more in the long run or more than they were intending to spend, they associate free with savings and assume it’s a great deal.
Most insurance companies are going to build that free month into the remainder of the policy. If you ask for the cost of a policy that requires you begin paying immediately, you might find it is the same overall rate or even less expensive in the long run.
The good news is there are plenty of discounts available when it comes to auto insurance. The trick to finding a great rate is sorting through the gimmicks and finding policy features that really do provide savings. If you would like more information on the best insurance rates or you need help searching for a policy that is right for you, use our online search tool free no obligation required.