- Paying for motor insurance by month could add as little as 5.35 per cent extra to the cost of the original premium
- Some motorists forego car cover altogether, says moneysupermarket.com
Drivers looking to keep the cost of their car insurance manageable may opt for the convenience of monthly instalments; however failure to identify the best deals could prove to be costly, according to research by moneysupermarket.com.
The UK's leading price comparison site looked at the options for consumers wanting to pay their annual motor insurance premium in monthly instalments1. Unfortunately insurers charge their customers for this privilege; those who decide on monthly repayments can expect to pay on average an additional 10.02 per cent to the cost of the original premium2. However, this can be markedly less if motorists shop around for the best deal - as little as a 5.35 per cent increase.
Steve Sweeney, head of motor insurance at moneysupermarket.com, said: "There is no doubt that running a car is an expensive thing to do, and in today's climate we are all looking for ways to cut our outgoings and make our finances more manageable. Opting to pay for the cost of your car cover by month is a good way of keeping your initial outlay for car cover down. While this may be more convenient compared with forking out for the whole year's cover - it's crucial to make sure you're aware of the additional cost and ensure that you scour the whole market to find the most reasonably priced deal. Insurers can help motorists by not charging more than they need.
"Worryingly, some motorists may forego cover all together - our recent research discovered a fifth of motorists have driven uninsured3 (19 per cent) - a risk no motorist should take. By covering yourself to drive a car, you are not only protecting yourself in the event of an accident, theft or damage, but you are safeguarding yourself against other motorists as well. I advise motorists to take the time to shop around for the best deal available for their circumstances.
Motorists could consider other financially-savvy ways to pay for their motor insurance premium, such as using a zero per cent purchase credit card.
Steve Sweeney added: "By putting the cost of the premium on to a zero per cent purchase credit card, drivers would be able to pay for their policy in monthly instalments without paying interest. There are a number of zero per cent purchase cards on the market for up to 10 months, so if you are eligible, you'll only pay for the original price of your policy. Be very careful that you do pay off the total cost of your premium within the zero per cent period, as if you don't, you could incur higher interest rate fees of 15.9 per cent APR on the whole cost of the premium, not just the balance4. "
- Ends -
Notes to editors:
1 Motor insurance monthly repayment structure typically involves an initial deposit (around the value of two months instalments) - the remaining balance is then paid as a set amount over nine or ten months.
2 On average the percentage increase to the original cost of an annual policy by paying an insurer in monthly instalments (based on the insurer's APR) is 10.02 per cent - based on a selection of motor insurance providers on 20.04.09. Full breakdown of percentage additional costs available on request.
3 Research undertaken by Opinium Research based on an online poll of 2,386 British adults between 27 February and 03 March 2009. Results have been weighted to nationally representative criteria. www.opiniumresearch.com
4 Marks & Spencer Credit Card - 10 months interest free for purchases with a 15.9% APR
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