Those paying monthly pay more

New research has been released by uSwitch.com claiming that motorists who pay monthly on their car insurance pay an average of £50 more than the 52% of motorists who pay annually. This means that a staggering £624 million is being made by the insurance companies due to the fees charged on interest.

13 million people pay monthly on their car insurance, and the extra costs are an added burden that many customers do not even realise they are paying. With the recent 30% rise in petrol, the cost of running a car has gone up to £2,482 a year. To put this figure into perspective, it adds up to 14% of the average annual net salary.

The report claims that the average annual cost of car insurance if paid in one go is £459.44, but when paid monthly it rockets to £506.76. The world seems to be getting more expensive to live in lately and, with costs of just about everything else rising, people will have to think long and hard about how much they are spending on their insurance, especially as it is a cost that could be avoided.

The interest charged by insurance companies for customers who pay monthly is a whopping APR 23.8% on average. However, many people feel that they simply don’t have the resources to pay for a whole year’s insurance upfront. In this case, customers are advised to search for companies like Virgin who do not charge a monthly fee. But the advice comes with a word of warning: a low APR could mean a high premium, and you should always work out the overall cost before purchasing a new contract.

Essentially, customers should always pay upfront if they can, but if this is not an option then they should shop around for the best deal possible.

Comments

Leave your comments

Name:
Email:
Comments:
Please enter the validation code shown

Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.