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Warning - Privilege Car Insurance attempted rip-off
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# 1
Old 31-12-2008, 1:04 PM
MoneySaving Convert
Join Date: May 2008
Posts: 95
Angry Warning - Privilege Car Insurance attempted rip-off

Hi people,
Want to warn anyone receiving a 'helpful' letter from Privilege Insurance that their car insurance will be renewed automatically about an unpleasant scam that Privilege are attempting to pull.
On the covering letter, the insurance premium is given as a certain price, with the instruction 'you don't need to do a thing! your car insurance will be renewed automatically'. In the details of the policy, the 'total payable annual' is given as the same price advertised on the covering letter. But if you look at the small print below this, you see that in fact they are planning to charge you (without you needing to consent in any way other than not phoning them up to complain) an APR of 23.6% for monthly payments, and that they will actually take out around 15-40 more from your account than the 'total payable'. Not nice to charge 23.6%, at a time when a lot of people are counting every penny.
We're certainly not going to use them again
The Hatster
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# 2
Old 31-12-2008, 1:16 PM
MoneySaving Convert
Join Date: Dec 2006
Posts: 77

i've just had exactly the same from marks and spencers car insurance quoting 23.6%apr however i paid for mine monthly in the 1st place.

so is that not right then?
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# 3
Old 31-12-2008, 2:04 PM
Serious MoneySaving Fan
Join Date: Mar 2007
Posts: 1,705

Its called auto-renewal, and it would have been included in all the paper work you obviously read before, where you gave your consent for it to happen.

It is very common for most policies now. All you have to do is contact them to stop it. You get charged APR because in essence a company loans you the money to pay the premium.
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# 4
Old 31-12-2008, 2:28 PM
Mega Magnificent Maxi-Meticulous Uber-MoneySaving Magnate
Join Date: Apr 2004
Location: Norfolk
Posts: 76,804

Car insurance is an annual contract and designed to be paid yearly. If you choose (and it is your choice) to pay monthly, then a credit agreement is used. The credit company will pay the insurer the annual premium up front and you will pay the credit company monthly with interest.

it is not a scam. Its normal and has been this way for over 20 years. I cant see what part of it you see as being a scam.

Not nice to charge 23.6%, at a time when a lot of people are counting every penny.
Its a typical rate for short term credit though and the amounts usually involved. If you dont like it then pay annually. Or go through a company that has a lower rate.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
dunstonh is offline
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# 5
Old 31-12-2008, 3:04 PM
MoneySaving Convert
Join Date: May 2008
Posts: 95

The reason I'm unhappy about it is that this isn't stated upfront. I'd be quite happy if they'd presented it as many other companies do, stating clearly that you can 'Pay X annually or a total of X + Y monthly', and if they had put both these pieces of information on the covering letter. This allows people to consider the situation for themselves. However, I felt the covering letter was designed precisely to give people the impression that they would pay a certain amount, and not more than that. The actual information about how much you would was placed on another piece of paper in small print.
I see this as an attempt to mislead people. I'm afraid that this way of working is well-known and obvious to some, but those of us who don't know it already need to be told about it clearly by the letters that the insurance companies send us.
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