Insurance direct debit payments could cost moreMonthly payments: convenient, but expensive
19 October 2010
Paying for insurance on a monthly basis costs more than 10% more than annual payments would cost. But , a recent Which? survey shows that 15% still pay for car insurance in this way rather than annually and are subject to APRs.
Three quarters of those who pay for car insurance on a monthly basis said it helps with budgeting. However, difference in premium payments is significant.
Which? research shows that monthly payments can add around 10% to the cost of car cover. Although in one instance, car insurance for a Ford Mondeo cost 23% more if paid for on a monthly basis. In this instance, cover costs £437 when paid for in a lump sum, but £566 (with the same provider) when paid for on a monthly basis.
Annual payments more popular
Paying for car insurance and home insurance on an annual basis is far more popular than making monthly payments. More than eight in ten drivers pay for their car cover up front, while seven in ten opt for a lump sum payment for their home insurance. In both cases around three quarters of consumers pay up front because they believe it works out cheaper. Less than one in ten believe monthly payments offer better value for money.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what's going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.