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.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

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.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week