Monthly Car Insurance Doesn't Have to Break the Bank

News provided by

moneysupermarket.com

15 Aug, 2011, 16:00 GMT

CHESTER, England, August 15, 2011 /PRNewswire/ --

  • Paying Monthly for Motor Insurance Could Add as Little as 5.34 Per Cent Extra to the Cost of the Original Premium

As car insurance premiums rose by 31 per cent in 2010[1], and with similar rises occurring earlier in 2011, drivers looking to keep car insurance costs manageable may opt for the convenience of monthly instalments. However, failure to identify the best value pay monthly options could prove to be costly according to research by moneysupermarket.com.

Britain's number one comparison site looked at the options available to consumers who want to pay their annual car insurance premium in monthly instalments[2]. Unfortunately, most insurers charge their customers for this privilege and those who decide on monthly repayments can expect to pay on average an additional 10.68 per cent to the cost of the original premium[3]. This can be dramatically reduced however, if motorists shop around for the best deal - as little as a 5.34 per cent increase.

Pete Harrison, car insurance expert at moneysupermarket.com, said: "Running a car isn't cheap, made worse by the rising fuel costs we have seen recently. The cost of car insurance can be a huge strain on your finances so paying for your car cover on a monthly basis is a good way of keeping your initial outlay for car insurance down. However, while this may be a more convenient and manageable way to pay for your cover, it's crucial to make sure you're aware of the additional costs involved. It is also necessary you scour the whole market to ensure you find the most reasonably priced deal. Insurers can also play a part in helping motorists by not charging more than they need.

Motorists could consider other financially-savvy ways to pay for their car insurance premium, such as using a zero per cent purchase credit card.

Pete Harrison continued: "By putting the cost of the premium on to a zero per cent purchase credit card, drivers can pay for their policy in monthly instalments without paying interest. There are a number of zero per cent purchase cards on the market, so if you are eligible, you'll only pay for the original price of your policy. However, you need to be disciplined if you use a credit card, and aim to pay off the balance before the end of the promotional period, and within 12 months if the promotion is longer otherwise you will still be paying when your insurance is up for renewal."

Notes to editors:

[1]The rising cost of car insurance

Over the past year car insurance quotes have increased on average by 31%.  The average moneysupermarket.com quote has gone from £519 to £680 (44p per day). Figure calculated using 21,370,762 enquiries made between 11/01/2010 and 13/01/2011.

[2]Car 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.

[3]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 10.68 per cent - based on a selection of car insurance providers on 02.08.11 

Full breakdown of percentage additional costs available on request.

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Nicki Parry
PR Officer
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nicki.parry@moneysupermarket.com