Thirty four states now allow some type of pay as you drive car insurance that can save many drivers hundreds of dollars a year in premium costs

Money saving tips for car insurance

People with questionable credit are often faced with budget constraints and are particularly sensitive to auto insurance premium costs.

At Auto Credit Express we're familiar with this problem due to the fact that for the past two decades we've been helping car buyers with problem credit find those dealers that can arrange for approved auto loans.

In some extreme cases these consumers can't afford the payments on either a new or newer used car because their auto insurance rates are too high.

This is partially due to the fact that in a number of states insurance premiums are not only based on an individual's driving record but also, at least in part, on the insured's FICO scores.

But there is a type of auto insurance that, even under these circumstances, could make the car insurance premiums for some people with credit issues more affordable.


The insurance product is called pay as you drive (PAYD). PAYD is a form of car insurance that, on top of the usual pricing factors, calculates a portion of the premium on how far the policyholder drives. By giving those lower mileage drivers a discount over what they would normally pay, it takes into account the reduced risks these drivers pose for accident involvement.

Ecological impact

But the benefits of this type of insurance don't stop by simply saving drivers more money. Believe it or not PAYD insurance is also good for the environment. According to the Environmental Defense Fund, a Brooking Institution report shows that PAYD insurance also has ecological benefits if it were available to all drivers, to wit:

• Driving would decline by 8 percent nationwide, translating into a savings of about $50 billion to $60 billion a year in driving accidents and other car-related damage.
• Total U.S. carbon dioxide emissions would go down by 2 percent and oil consumption by about 4 percent, helping to stabilize our climate and reducing America's dependence on foreign oil.
• Two out of three households would pay less for auto insurance, with each of those households saving an average of $270 per car.

How PAYD programs work

PAYD insurance can be computed in a number of ways (along with other ratings factors for drivers) including specific mile ranges, on a per mile basis, or by the number of hours on the road as well as the miles driven.

Premiums for these kinds of policies sometimes include options for shorter policy periods (as in a 1 month versus 6 month policy) as well as premiums based on mileage only (i.e. policyholders pay for 8,000 miles and when they reach that plateau they renew the policy).

Monitoring for enforcement of time and mileage limits can be accomplished with on-board systems (such as GM's OnStar), OBD-II diagnostic port systems (such as Progressive's "SnapShot" – a system that also monitors driving style), GPS meters and certified odometer readings.

As we see it

PAYD insurance could certainly help low-mileage drivers – even those with bad credit that drive in states where auto insurance rates are partially based on FICO scores.

So the next time you find yourself shopping around for car insurance, be sure to check to see if your state allows some type of PAYD car insurance program. If it does, it certainly wouldn't hurt to check out what those programs offer as well as what your savings might be.

One more thing we suggest you check out: if your credit is less than perfect we want you to know that Auto Credit Express specializes in helping applicants with car credit issues find dealers that can give them their best chances at auto loan approvals.

So if you're ready to reestablish your auto credit, you can begin now by filling out our online auto loans application.