Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Aug 16, 2021

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Here's what you need to know...

  • Car insurance companies generally offer a few different payment options to their drivers
  • One of these options includes a down payment that is usually 30 percent of the entire premium price
  • To lower the down payment, drivers can find ways to lower the total amount of their premium such as asking for discounts

To lower the down payment, drivers can find ways to lower the total amount of their premium such as asking for discounts Down payments are monies you pay upfront, which will lower your monthly cost. If you are required to make a down payment on your policy, it is generally two months of coverage or up to 30 percent of the total premium.

Although it may be difficult to pay this much at once, it does help to have the remainder of your payments reduced.

Depending on your credit and driving history as well as the auto insurance carrier, you may have different payment options to pay for your coverage. These options generally include:

  • Paying the entire premium up front
  • Making a down payment and then paying the remainder of the premium over the life of the policy period
  • Making monthly premium payments over the life of the policy period

Most car insurance companies will give their policy-holders a discount for paying their premium in one lump sum payment. If it is possible for you to do this, it will save you money in the long run. Drivers who choose one of the other two payment options will usually be subject to additional service fees and possibly interest.

To help simplify the purchase of car insurance and find lower rates, use our FREE online price comparison tool. Just enter your zip code above, compare quotes, and choose the one that works best for your budget.

What is used to determine the price of my policy?

Car insurance companies use many different factors to determine the price you will pay for your policy. These factors help underwriters to determine how much of a risk they are taking by insuring you as a driver.

Drivers who seem to be more of a risk will usually pay more for their auto insurance premiums, while lower-risk drivers will pay less. These are the most common factors auto insurance companies use to determine your car insurance premium:

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Your Driving Record

If you have had tickets, accidents, or claims over the last couple of years, you will likely be subject to a higher premium. Car insurance companies believe that past driving behavior can predict future driving behavior.

Your Credit History

Some drivers are unaware of and even surprised by this factor.

However, most car insurance companies look at your credit history and score to help determine the price of your policy.

They claim that studies show that drivers with poor or simply okay credit are more likely to file claims. Whereas drivers with good or excellent credit are less likely to file an insurance claim on their insurance policy. While this practice may seem unfair to some, it is legal in most states.

Where You Live

Various cities and areas of the country are more prone to natural disasters, crime, such as car theft and vandalism, and even car accidents. If you live in one of these areas, your car insurance company considers you to be a higher risk.

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How Frequently And Far You Drive

Drivers who are on the road more often and drive further distances are naturally more likely to be in accidents. The longer your typical daily commute is and the more often you drive your car, the higher your premium might be.

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What Type of Car You Drive

Some makes and models of cars are less safe and more likely to have severe damages in an accident, which makes insuring them more expensive. In addition, cars that cost more will usually have higher insurance premiums.

Where the Car Is Parked

Cars parked in a garage are more protected from weather and criminals that could steal or vandalize them which makes them less of an insurance risk.

If you do not have a garage to park your vehicle in, you may end up paying more for auto insurance.

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Your Age

Most drivers who are older have more driving experience, making them less likely to get into accidents and file claims. Often, younger drivers will pay higher premiums on their auto insurance policy due to this factor.

Your Gender

In general, males tend to be risk takers and this can reflect in their driving habits. Many car insurance companies will charge higher premiums for male drivers, especially unmarried ones.

How do you decrease the cost of auto insurance coverage?

While many of the aforementioned factors cannot be changed, drivers do have some control over the cost of their car insurance premiums. Here are some tips to help decrease the price you pay for car insurance.

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Drive Defensively

Even if you have a bad driving record, you can start with better habits today to decrease your future premiums.

Improve Your Credit

While it will not happen overnight, improving your credit history and score can earn you a better car insurance premium. This includes not incurring any new debt and working to pay off current debts.

Consider Your Coverage Types

Talk to your insurance company and do your own research to discover if there are any coverages you are paying for that you may not necessarily need. Letting go of certain coverages can decrease your overall premium.

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Raise Your Deductibles

If you have collision and comprehensive coverages, you may want to raise your deductibles if you can afford to pay more in the event of a claim. Doing so will decrease your total premium.

Take a Drivers Education Course

Many car insurance companies will offer discounts to drivers who have completed drivers education course within a certain time period.

Ask about Discounts

Most car insurance carriers offer various types of discounts. However, some will not automatically apply these discounts and require drivers to ask about them in order to receive them.

You should ask about the following discounts if they apply to you:

  • Occupational discounts for first responders, teachers, or those in the medical field
  • Safe driver discounts
  • Multi-policy discounts
  • Military or veteran discounts
  • Student discounts

While paying for car insurance is a necessary expense, there are steps drivers can take to lower their premiums.

If you need to lower your car insurance premium or your down payment, consider comparison shopping for a policy with our FREE online price comparison tool. Enter your zip code in our online tool below to find your savings!