Drivers urged to consider options as motoring costs climb
Motoring costs have soared by nearly £500 in the past year, with the average motorist now spending £2,482 to insure and fuel their car, uSwitch has revealed.
Research by the price comparison site showed petrol costs have increased by 31% since 2007 and insurance premiums have risen by an average of £19 (4%) over the past year. However, there are some steps drivers can take to cut costs, according to Ashton Berkhauer, insurance expert at uSwitch. He suggests paying for car insurance in an annual lump sum, rather than monthly as insurers are charging motorists an average of 23.8% APR to pay monthly, almost £50 extra for the average UK policy holder.
Berkhauer added: “As insurance costs, petrol prices and general living expenses are soaring, motorists should think twice before agreeing to monthly payments on their car insurance. It may seem like a neat solution if you’re cash strapped but it carries a hefty interest price tag so should be avoided where possible.
“Of course, if you can’t afford to pay for car insurance in one lump sum then this initiative could be a godsend. For those with more financial options, this really is an unnecessary expense that merely inflates the cost of the policy.
“If paying upfront is too much for some consumers, shopping around for an insurance provider, such as Virgin, which doesn’t charge for monthly instalments could be another option. The APR charged by every insurance provider varies so consumers who have no choice but to pay monthly should look for the cheapest option. However, the actual cost of the premium should remain the key focus as the provider offering the lowest APR for monthly payments may not offer the most competitive policy price.”
Berkhauer concluded: “Finally, using a competitive credit card such as HSBC’s 0% on purchases for 12 months could be an option to spread the cost without having to pay more for insurance.”