Car insurance customers may be paying 15 percent more for an agreement by paying for a policy in instalments rather than upfront. Experts at Moneyshake revealed paying for cover annually is a “simple money saver” with costs dramatically slashed for those who pay charges at the start of their term.
Analysis by the firm has put the true saving at £109 if motorost can afford to cover costs at the beginning of an agreement.
Speaking to Express.co.uk, Moneyshake CEO Eben Lovatt said: “Paying annually is another simple money saver.
“If you can, avoid paying in instalments, as this can make your policy 15 percent more expensive overall.
“If you do pay the full amount upfront, you can save £109 on your car insurance.”
The added charges are simply the interest placed on the repayments you will make throughout the year.
MoneySuperMarket says those who pay monthly will also need to have a credit check run past them to assess how they have managed debt.
Those with a low credit score may be charged higher premiums as these drivers are considered at a higher risk.
uSwitch adds that some firms will also offer an extra fee for those who opt for a monthly payment plan which could see motorists miss out on securing a great deal.
“You’ll usually be asked to pay an upfront deposit of around 20 percent of your annual cost, then the rest of your payments will be spread over 10 or 11 months.
“You’ll also have to pay interest if you pay monthly, as you’re effectively taking out a loan for the sum of your insurance and paying it back over the year.”
Many car insurance providers do not offer monthly payment plans meaning road users can extend their search by opting to pay annually.
GoCompare expert Matt Oliver has also warned paying insurance on a monthly basis is a “loan with interest added”.
Published at Mon, 06 Jul 2020 08:39:00 +0000