Insurance

Should I Borrow Money to pay my Insurance?

Insurance is something that we may have to have, such as for our car or home, or something that we choose to give us peace of mind such as contents or pet insurance. It can be an expensive thing to buy and so we may feel that we will only be able to afford it if we borrow money to pay it.

Some insurance policies come with an option of either paying in a lump sum or in instalments. The instalment option can often be more expensive because the insurance company will charge more if you pay this way. It is worth calculating how much extra this will be, if you are offered this option. It could even be considered to be a form of credit as they are letting you spread the payments and charging you for the privilege. It might be that there are cheaper ways to pay it than this, it could be that you borrow money from somewhere else to make it cheaper. You may also find that you do not have the option to pay monthly and you need to find a lump sum, that perhaps you cannot afford to pay for all in one go.

Insurance is something that we take out just in case we need it. We can never be sure whether we will need to make a claim but it can be extremely helpful at times. If our car is stolen, for example, the insurance will give us the money to replace it. Knowing that we have that cover can be very reassuring and it can mean that we can replace things or do repairs that we would otherwise not be able to afford to do. Therefore insurance can be a really important thing to have, although there may be some types that you do not think are worth it for you.

It is good to start by making sure that you really do need the insurance and specifically the type of cover that you are being offered. You may find that there are lots of options on the insurance and you need to think through whether you really need all of the cover or whether you can save some money by going for something which is slightly cheaper or whether you in fact, need the insurance at all. It is a very personal decision and will depend on what you own and how much risk you are prepared to take as well as what you can afford.

Borrowing money for anything should be something which you really think hard about. You need to not only consider whether you make a good use of the money that you are borrowing but you also need to think about whether you will be able to manage the repayments. It is easy to assume that you will but sensible to work out whether you will actually have enough money to pay it and consider what might happen if your expenses go up or your income goes down and how well you will cope with that.

It is wise to compare the cost of different types of loans to see which will be the cheapest for you to use. It could be that a credit card might be the most convenient, but they can be a problem if you do not pay them off for a long time as they are expensive. Personal loans may be for more money than you need, so you need to be careful that you are not borrowing much more than you need and therefore paying out more than necessary. Payday loans may seem like a good option but they are very expensive and they only lend you money for a very short term. You may be better off going to a credit union for them money.

Whether you borrow money or not will depend on whether you think that the insurance is worth the extra cost that borrowing will be. Only you know whether it will be worth it for you and if you have no other option but to borrow. If you do borrow then it is important to research different ways to borrow and find the best possible way for you.

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