9th June 2015
Motorists are throwing nearly £1bn away every year as a result of not paying upfront for car insurance.
According to research from MoneySuperMarket.com, those who pay for their car insurance every month could save £62 each – or £992m – collectively as a nation by switching to an annual payment.
The comparison site’s analysis found 43.8% of drivers pay for their insurance monthly, at an average cost of £514 a year. However, those who pay for their insurance once a year are spending an average £452 – £62, or 11% less.
Therefore, those drivers paying monthly could collectively save almost £1bn a year simply by changing the way they pay.
Kevin Pratt, insurance expert at MoneySuperMarket.com said: “The cost of motoring is hefty, so it makes sense that so many people spread the cost of car insurance and pay monthly to ease the financial burden. However, it could end up costing you more in the long run.
“A handful of insurers refrain from charging more for monthly payments, but more often than not an additional cost will be applied if you opt for paying monthly rather than annually. The analysis clearly shows there are significant cost benefits overall to paying annually.”
Pratt pointed out that cash strapped motorists could consider other financially savvy ways to spread the cost of their premium.
He said by putting the cost of the premium on to a zero per cent purchase credit card, such as the Halifax Purchase Credit Card which offers 0 per cent on purchases for 21 months, allows drivers to spread the cost of their premium, effectively paying monthly without the additional interest.
“There are a number of these cards on the market, so if you are eligible, you’ll only pay for the original price of your policy, although your insurer may charge a small fee if you pay via a credit card. If you choose to pay using this method, you will need to be disciplined. Paying the balance off in full within 12 months will ensure that you won’t be paying for this policy when your new one kicks in,” he added.