Most insurers charge interest on car insurance payments when they are split over a year into monthly payments. But many drivers can’t afford to pay for their insurance in a one-off payment and are therefore left paying more.

Almost half, 46%, of drivers choose to pay for their insurance in monthly instalments, as of November 2022, according to Which? and the comparison website GoCompare.

In November 2019, drivers paid an average of £673 when paying monthly, compared to £456 for those who paid upfront, a difference of £217.

But in November 2022, the difference was £302, a 39% rise, with those paying in monthly instalments shelling out £757.60 compared to £455.49 for those paying annually.

It comes as car insurance premiums have risen 8% in the last year.

Low-income households often choose monthly payments.

Which? suggests that those paying more when choosing to split their insurance bill could be those that can least afford higher bills.

Young drivers, for example, often choose monthly payments according to GoCompare, but they typically pay the highest bills anyway as they are seen as a higher risk of making a claim. Low income households are also more likely to split their insurance payments, according to the Financial Conduct Authority (FCA).

For drivers who can’t afford to pay their insurance in one go, it could be cheaper to use an interest-free credit card or a low-interest loan.

However, for this to be cheaper, the credit card needs to be cleared before interest starts being charged and the interest rate of any loan needs to be less than a car insurer is charging.

There are also lots of simple tips and tricks which can lower the cost of insurance, which we explain in our guide to reducing your policy costs without cancelling.

Jenny Ross, Which? money editor, said: “At a time when household budgets are under huge strain, it’s concerning that customers who pay monthly for their insurance could be paying far more than those who pay their annual premium upfront.

“Paying using an interest-free credit card could help to spread the cost of annual premiums. Haggling and switching also remain effective ways of bringing down the cost of insurance.”