Buying car insurance in installments in Saudi

With car insurance premiums having the potential to reach thousands of riyals, many might wonder, “Is it possible to pay car insurance in monthly installments?” Fortunately, when you buy car insurance – a legal requirement for all drivers in Saudi – you may be given the choice of paying for your insurance in full or paying monthly installments. A few insurance providers in Saudi will allow you to break the payment if you pay with your credit card or use a “buy now, pay later” service. For drivers who can’t afford to pay their comprehensive insurance or TPL policy in full at the start of the policy term, paying in installments can help you spread out the cost of your premium over time.

But before considering splitting your car insurance premium into monthly installments, it’s important to understand how this option works to avoid any financial strain. Read on to find out all about paying car insurance in installments.

Can you pay for car insurance monthly in Saudi?

Most car insurance policies in Saudi cover a twelve-month period and require a single yearly payment. For many car owners, coming up with a large lump sum of money to pay for a 12-month car insurance may not be feasible; especially after car insurance premiums increased 400 percent! 

To ease the financial burden, a few insurance providers in Saudi recently introduced an option allowing policyholders to pay for their car insurance policies in installments. With this payment option, you’ll be able to spread the annual cost over a period of 3-6 months without interest and additional fees; instead of paying the full amount upfront. So, make sure to compare offers and payment options before buying your car insurance!

Should you pay car insurance in installments?

A good rule of thumb is to always pay cash. Still, installments or monthly payments can be the best way to pay for a purchase sometimes! Especially, when you’re in a position where you can’t afford to buy necessities. That’s the keyword! For example, installment buying makes it easier to afford to buy a house or a car without breaking the bank.

Similarly, installment plans allow you to spread out the cost of buying your car insurance – a legal requirement in Saudi – over time; making it easier to budget and manage your finances.

When should you use an installment payment option?

With car insurance on the rise in 2023, using an installment payment option can surely be convenient for everyone. In particular, splitting your total one-time expenses into fixed monthly payments will help you stay on top of your financial game, if:

• your insurance companies see your car as high-risk.
• you need to insure more than one car.
• you’re under 25 because younger drivers are more likely to pay higher insurance.

Ultimately, introducing an installment payment option can also increase the number of insured vehicles in Saudi Arabia — Call it a win-win situation for everyone! Without further ado, here is how you can break down your car insurance payment.

How to pay car insurance in installments in Saudi

Currently, car insurance providers offer 2 ways to split your car insurance premium into monthly installments. You will either have to use a credit card or Buy now, pay later service (BNPL).  

Use a credit card installment plan

There are many great advantages to using a credit card. Mainly, they are a great way to spread the cost of big purchases. Some insurance companies in Saudi Arabia, such as Al Rajhi Takaful and Malath Company, enable certain credit card holders to buy various insurance products and pay their installments over 12 months with no interest.

When you’re thinking about benefiting from an installment plan to buy your car insurance policy or renew a current one, here are the terms and conditions:

• The value of the insurance policy – whether comprehensive or TPL – must not be less than SR 1,000.
• You must use a credit card from one of the banks participating in the installment service.
• Cardholders must contact the issuer within two days (48 hours) to transfer the amount paid to an installment plan.

Overall, a credit card installment plan is a way to pay for your car insurance over several months. It can help you with budgeting and, as long as you ensure you make your repayments timely,  it won’t leave a huge hole in your finances!

If you have a credit card, be sure to contact your issuer or bank to find out about the range of rewards and benefits you are entitled to and inquire about insurance offers.

Use buy now, pay later services

Basically, BNPL is a type of short-term financing that allows buyers to make purchases and pay for them over time, usually with no interest. Two fintech companies, Tamara and Tabby, have been permitted by the Saudi Central Bank to offer these services, and are available through mobile apps for download.

Use Tamara to buy your insurance from Tawuniya

In partnership with FinTech Tamara, the Saudi insurer Tawuniya is introducing an option allowing policyholders to pay for any of its car insurance policies in installments.

According to the details, Tawuniya will issue your insurance policy after the first payment. Later, Tamara will collect the remaining amount in a series of interest-free installments over a period of 6 months. This service will be available when buying or renewing Tawuniya’s (comprehensive, sanad, sanad plus, or motor flex) car insurance policies insured for a maximum amount of 10 000 SAR.

Use Tabby to buy your insurance from price comparison websites

Similarly, Tabby it easier to buy car insurance by allowing you to pay for it over time instead of all at once. The main difference is that you’ll have to buy your insurance from a price comparison website. Moreover, you can either buy comprehensive insurance or TPL with own damage cover from a price comparison website. Plus, the policy value must not exceed 5,000 Saudi riyals.

Nonetheless, Tabby’s service offers buyers the freedom to choose between insurance companies. And it allows customers to split their purchases into four interest-free payments over three months.

Risks of buying car insurance in installments

Overall, the concept of buying car insurance in installments is still relatively new in the Kingdom. Thus, it’s very common for people to have doubts and wonder where is the catch here.

The only difference is that you won’t have to pay the full price upfront for car insurance. When you pay in installments, someone (your credit card or BNPL service) is shouldering the cost of the policy and letting you pay bit by bit. Basically, they’re lending you the money to buy your insurance!

So, don’t worry about getting limited insurance coverage — you’ll get the same coverage and benefits you would if you paid in full. Your insurance will be valid for the entire specified period, without the need to pay the full amount in advance. Still, installments have both benefits and downsides. Before buying car insurance in installments, consider the following:

1. Late fees. Luckily, if you miss a payment, your insurer won’t cancel your car insurance. However, credit cards and BNPLs will charge late payment penalties, which can increase your overall insurance costs. The best way to avoid these late fees, is to make your insurance payments on time. e
2. Credit impact. Both credit cards and BNPL missed payments can impact your SIMAH credit report score negatively. Thus, it’s important to understand the terms and conditions of any installment agreement before borrowing.

Weigh your options

All in all, there are several benefits to installment buying, including the ability to spread out payments over time and better manage your cash flow. While it can be a convenient and useful budgeting tool, installments can also lead to high levels of debt if not used responsibly.

As a consumer, it’s important to weigh the pros and cons of each payment method and choose the option that works best for your budget and financial situation. Most importantly, don’t forget to compare all your options if you’re looking to get car insurance at a cheaper rate!