Monthly Car Insurance: How to Save up to 40%

About half of UK car insurance policy holders have opted for monthly car insurance instalments.  It’s the easier option to consider especially when general living expenses are on the rise, petrol prices are up, insurance costs are up and families are hard pressed to find savings in the current economic climate.

Recently the AA produced a report that showed that UK motorists paying monthly car insurance premiums may be paying in some instances up to a whopping 40% per cent more than the basic car insurance quote.  It’s shocking to think that some car insurance companies will take blatant advantage of cash strapped motorist who just can’t afford to pay an annual lump sum by unnecessarily hiking up the cost of monthly car insurance.

Paying your car insurance in monthly instalments over a period of 10 or 12 months will be more manageable for the average UK household but is it really worth it when you consider, according to the AA, that the average annual car insurance premium of £778 could cost if paying in monthly instalments as much as £953. That amounts to an average increase of all motor insurance companies of just over 18% per cent.

Infact in a similar earlier report in June 2008, according to myfinances.co.uk an extra £624 million was paid out by UK motorists opting for the monthly car insurance payment plans, were the average annual car insurance policy cost £459 but is £506 if paying monthly.

At the time of this report based on the figures provided the average increase in cost is just over 9% per cent, this half the average increase of what motorists are paying today (18%)

This is a worrying trend and clearly reveals that many insurers will take any advantage they can of the motorist in current economic hard times.  Sadly, for many UK motorists burdened with cash flow problems they have little option but to spread their payments over 12 months and have to accept these hefty increases in their car insurance premiums.

So ‘motorists beware’, what actually happens when you opt for monthly car insurance instalments is that the insurer will loan you the annual cost and charge you an annual interest rate of up to 25% and possibly even more just for the privilege of paying monthly.  If you can afford to do so, then pay it in one lump sum.  Alternatively, it may work out less expensive if you consider purchasing your car insurance using a zero percent credit card and then paying off your credit card loan on a monthly basis.

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