The insurance industry is raking in £624million extra each year from drivers that choose to pay their car insurance in monthly instalments as the cost of motoring increases.
With annual motoring costs up £500 a year, Brits are having to find ways of spreading the cost to make ends meet, and paying their car insurance
in monthly instalments is one way of doing this; but it costs them a lot more in the long run, uSwitch has found.
Fuel prices have risen 31 per cent since 2007, with drivers now paying an average of £64 to fill their tanks, and car insurance premiums rising by £19 in the last year, uSwitch is urging motorists to consider the additional cost incurred by paying monthly.
More than half of British drivers – 13million – pay their car insurance premiums monthly instead of in a lump sum, but their car insurance companies
are charging them an average of 23.8 per cent more for the privilege, which is almost four times the most personal loan rates currently available.
Ashton Berkhauer, insurance expert at uSwitch.com, comments: "As insurance costs, petrol prices and general living expenses are soaring, motorists should think twice before agreeing to monthly payments on their car insurance. It may seem like a neat solution if you're cash strapped but it carries a hefty interest price tag so should be avoided where possible.
"Of course, if you can't afford to pay for car insurance in one lump sum then this initiative could be a godsend. For those with more financial options, this really is an unnecessary expense which merely inflates the cost of the policy."
If paying the whole premium in one go is not an option, then uSwitch recommends that drivers compare car insurance quotes
to find a provider which does not charge extra for paying monthly, or using a credit card which offers a 0% interest period and spread the cost that way instead.
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