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Department of Insurance rules require all automobile insurance companies to accept premium payments in installments. However, some insurers offer the installment payment plans through their associate finance companies in which case you are generally forced to pay high rates of interest.

Clearly, shopping for car insurance smart infers that you shouldn't just seek and settle for low rates but also do your math on identifying low-cost financing. You can do this by simply asking who is providing your installment plan. There are insurance companies that proudly offer their own equated monthly payment plans. Whatever that be, make sure of things such as the outright down payment, the number of installments, interest charges, service charges, if there are any hidden charges and the final amount of monthly installment. But before you get insurance quotes with installment payment plan from any company, make sure you get everything about the plan in clear writing.

Asking for payment break-ups in writing is a way of committing the insurers to freeze your installments for the entire term of validity of the policy. Usually, when you do so, all possible charges which the agents had deliberately hidden till then will have to surface up which is to your advantage. Also you will not be in shock when you receive the bill later.

In the present market, all auto insurers and finance companies have their terms at least as good as follows:

* For a policy of one year's validity, the down payment will be 16.67% and ten (10) equal installments payable monthly. If you have your policy written through associations recognized by companies, then the down payment will be 20% of the total.

* On similar lines a six-month policy will require a down payment of 33.33%, and four equal payments payable monthly.

While the above is the stipulation, some insurers and finance companies are willing to offer smaller than what is stipulated down payment and are not so rigid on the term side too. However, an insurance company is at right to add a service charge to your payment, but make sure everything is crystal clear in black and white before you sign on the dotted line. Here is an indication of the basic service charge that can be levied - $3 per month, and the company is also at its legal liberty to add 50 cents for every $250 (or fraction) of premium paid over $500.

Alevoor Rajagopal, MBA, a business consultant, voices for fair practices in used car deals. He also writes passionately on showcasing individuality with MySpace layout. Visit his blog on online income tips.