Monthly Motor Insurance Customers Shown To Be Clocking Up Car Costs

While spreading payments over the course of 12 months may seem like an ideal way to reduce the pressure of paying for car insurance, drivers should be careful that in doing so they do not drive their finances up the wall.

Such is the claim of uSwitch has released research which indicates some 52 per cent of UK motorists – around 13 million – are opting to meet the cost of their vehicle insurance policy in monthly installments, rather than a single annual payment. By doing so, such consumers are paying around 50 pounds in additional unnecessary costs each year. The average annual policy is indicated as currently standing at 459 pounds and 44 pence, although those who pay on a monthly basis will pay a total of 506 pounds and 76 pence. Overall, an extra 624 million pounds is being splashed out by those motorists who pay monthly.

In addition it is indicated that opting to make payments over a regular basis instead of a one-off lump sum could have a particular impact upon drivers during a time in which they experience a surge in other constraints on their spending. The price comparison website asserted that the typical motor insurance has increased by four per cent – around 19 pounds – during the last 12 months, with petrol price up 31 per cent since 2007. It was claimed that the cost of filling up at the tank is 478 pounds more expensive now than last year.

It is possible that such rises could have an affect on their policy to manage other constraints on their spending which may include areas such as personal loans, store and credit cards and mortgage repayments.

Ashton Berkhauer, insurance expert at uSwitch, said: “As insurance costs, petrol prices and general living expenses are soaring, motorists should think twice before agreeing to monthly payments on their car insurance. It may seem like a neat solution if you’re cash strapped but it carries a hefty interest price tag so should be avoided where possible.

“Of course, if you can’t afford to pay for car insurance in one lump sum then this initiative could be a godsend. For those with more financial options, this really is an unnecessary expense which merely inflates the cost of the policy.”

Mr Berkhauer went on to report that those looking to get a good deal on their car insurance policy should take the time to scour the market to make sure that they get the best deal possible. And while paying the full amount upfront was recommended, those who are unable to do so were advised to check the annual percentage rate charged by their insurance provider and look for a more competitive offer if they deem it to be particularly costly.

When on the lookout for a new car, applying for a personal loan may be recommended, as it might allow consumers to get the vehicle of their dreams quickly and easily leaving them with affordable monthly repayments to make. The additional financial help that a loan brings could also see borrowers be able to purchase a comprehensive car insurance policy upfront, in addition to meeting other expenses such as MOT, petrol and repairs. Such a loan may be particularly advisable after AA Insurance recently reported that those who are convicted of using a mobile phone while behind the wheel will not only be hit with a 60 pound fixed-penalty notice but could also see their annual motoring costs rise by up to 18.1 per cent.

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