You are here: Home - Insurance - News -

The insurance trap adding as much as £257 to your car cover

0
Written by:
20/01/2020
Motorists who pay monthly for their car insurance pay £55.36 more on average for their policy than those paying annually.

However, analysis by GoCompare found premiums for paying monthly vary greatly between insurers and some young drivers can see as much as £257 added to the cost of their cover.

Almost a third (31%) of drivers currently pay monthly for their car insurance and previous studies have shown that people who pay for their insurance monthly rather than annually are up to 33% less likely to switch provider.

Monthly payers are also much more likely to need to save money on their outgoings.  Almost half (47%) of drivers from lower-income households pay monthly for their car insurance, compared to just 29% of those from the highest earners.

Lee Griffin, chief executive of GoCompare, said: “Car insurance is always cheaper when you pay one annual payment, but drivers who can’t afford to do that are hit by additional costs.  The added danger here is that people paying monthly are statistically more likely to renew again with the same insurer, without checking the total cost.  It can become a cycle of paying more, for people who can least afford to do that.

“At the very least, you need to check what your insurer is charging for monthly payments and if you are with an insurer that charges 17% extra for monthly payments, it is going to be well worth shopping around for a better deal.”

How to break free from the monthly insurance trap

  • Be aware of the costs involved with paying monthly. While it spreads the cost into manageable chunks, it isn’t free
  • Could shopping around and switching reduce the overall cost of your insurance? As always, the easiest way to bring down the cost of your insurance is to switch to a better deal
  • Do you still need to pay for your cover monthly? Many people opt for monthly payments when they first start paying for insurance.  It is worth reviewing if you really need to pay that way now
  • If you need to spread the cost of your insurance, consider taking out a 0% purchase credit card and set up a direct debit that will clear the total payment over the 12-month term of the insurance. Overall this will work out cheaper than paying the interest charged by insurers.

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Homebuyer enquiries rise as asking prices see largest monthly rise on record

Homebuyer enquiries rose by 15 per cent between December and January, compared to a year ago, signalling a return of...

Close