Drivers paying 22% extra for monthly instalments
by Kay Murchie
The price comparison website, MoneyExpert.com, is advising drivers to check out the cost of spreading their payment across the year. Several motorists opt to pay their premiums by monthly Direct Debit but in doing so they can be adding 22% to the cost of their car insurance.
Currently, car insurance premiums are at a record high with the average costs in some categories reaching £1,000 a year. Insurance companies take the view that the premium is not paid for in advance so it is seen as a loan.
MoneyExpert.com advises motorists to look into using a credit card to pay for their car insurance, one that offers a long interest-free period, whilst remembering to pay off the balance before the introductory offer expires. However, the majority of credit cards offer interest rates below 22%, which is the average charged by motor insurance companies.
Only 8% of motor insurers do not make a charge for spreading the cost of a policy using direct debit. MoneyExpert.com therefore recommend looking at the precise terms offered for paying by instalments when obtaining quotes.
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