Motorists having to fork out more for insurance policies by opting for the pay-monthly plan
More than half of drivers in the UK are opting to pay for their insurance monthly rather than in one lump sum
New statistics reveal that drivers in the UK are overpaying by around 19% for their car insurance premiums by opting for pay-monthly instalment plans, rather than paying it off in one lump sum.
An investigation by Auto Express found that more than half of motorists in the UK are overpaying for their insurance because they’ve signed up to pay in monthly instalments rather than paying for it in one lump sum.
Auto Express compared premiums from numerous insurers and discovered that those who choose to pay for their policy via monthly instalments are charged on average around 10% more for the same cover. This is down to the fact that some insurers are charging around 19% interest on top of monthly payments.
The team at UK-based comparison website Gocompare.com claim that 52% of drivers choose to pay for a policy over a 12 month period.
Motorists opting for some of the cheaper policies can still end up spending around £50 more by choosing to pay via monthly instalments, whilst drivers opting for much pricier premiums, which include extra benefits such as a courtesy car, were found to be paying out hundreds of pounds more over a 12-month period.
These figures were discovered after the Association of British Insurers (ABI) came out and said that vehicle premiums had hit record high levels – an average fully comprehensive insurance policy now costs about £462.
“Customers paying for their car insurance in monthly instalments are effectively taking out a loan for the cost of the cover and paying it back over 12 months, which means they incur interest and generally pay a higher total bill,” said a spokeswoman from the ABI.
The interest rate at some insurance providers was as high as 19.2%.
Car insurance expert from Gocompare.com, Matt Oliver, says that motorists should look at other ways in which they can pay for their insurance policy outright, rather than having to go down the monthly instalment route, such as using a 0% purchase credit card to pay for the insurance policy in one payment.
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