Car insurance payments are some of the most cumbersome (yet necessary) payments that one cannot afford to miss. An individual may attract a heavy fine/penalty from the cops if found driving without car insurance. Moreover, the settlement payment may wreck someone financially if they get into a car accident without valid insurance coverage.
Studies show that the average American spends $1771 per year on car insurance, which is nearly 2.57% of the average American’s annual income. Now, insurance payments may seem like an unnecessary cost for people who drive safely and do not get into traffic accidents. However, one needs to consider that these payments offer unparalleled peace of mind for the drivers. In the event of an unlikely accident, this insurance scheme will come to the rescue of the driver for medical and car repair costs. Insurance companies now offer lucrative liability insurance quotes for drivers that drive safely, buy a car with advanced safety features, have a spotless driving record, and have a stellar credit score. They also have attractive insurance offers for first-time car buyers and students.
These companies have tie-ups with payment processors to accept insurance premium payments in one or more of the following ways:
Consumers often use one or more of these payment technologies to pay for their auto, life, homeowners, and renters insurance. In the case of abnormally high insurance amounts, insurance carriers say, “Get car insurance now, and pay later!” How? Let’s find out!
A Buy Now Pay Later Scheme (acronym: BNPL) is a payment option that allows the buyer to purchase services/goods and pay for them over time as equated monthly installments.
Most BNPL schemes have evolved over the last few years. Initially, the project was meant only for smaller purchases (mostly <500$) in which the consumer could pay in 4 equal installments over 6-8 weeks. The modern-day BNPL schemes support larger purchases for which the consumer can pay for an extended period (up to 36 months). The traditional BNPL plans were interest-free; however, the modern ones usually have additional interest payments associated with the principal amounts, usually for more significant amounts.
There are primarily three types of BNPL schemes based on the payment type and customer-merchant relationship. However, one may classify these schemes based on their service model and payment plans.
We know that consumers that leverage the BNPL schemes correctly can save a lot of money and time. Savvy consumers often opt for interest-free BNPL plans and reinvest the funds at hand into high-return instruments such as the stock market. However, how do the insurance companies leverage BNPL? Here are a few benefits for the insurance companies that adopt such schemes:
The BNPL scheme also has some downsides. Consumers who are not great with savings go over their heads and purchase more than they need, attracted by the lower installment cost. Here are some concerns about a BNPL plan for the merchant.
Auto insurance companies often partner with reliable third-party payment processors to adopt the latest payment technologies for their consumers. These companies attract more consumers by offering modern, fast, low-cost payment options. Most consumers are willing to pay slightly higher insurance rates if they can get the convenience of paying via a buy now pay later car insurance scheme.
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