Credit vs Direct Debit

Lozzy0506_2

Hi I'm new to this so pls excuse any mistakes!

I can't afford to pay my car insurance in one go, so I have two choices:

Do I, 1: Use a credit card which is currently clear with normal interest, to pay it off in one go, and then pay my balance off monthly at around the same amount as I would pay insurance

OR

2: Get a direct debit plan with the credit check and APR from the company and pay monthly.

Is 1 better for my credit score and also going to be cheaper for me or should I go for the credit check and swallow the extra on my premium?

Any help is appreciated!

leachyd

Have you worked out which each option will cost you? If its about the same then i'm not sure there wuld be that much of a difference between the two options....Id just do the cheapest, which i suspect is the direct debit

TFD_2

I'd compare the APR from the insurance company with the APR from the credit card, and go for whichever is cheapest!

TFD_2

leachyd wrote: »

Id just do the cheapest, which i suspect is the direct debit

Not necessarily...

Many insurers work out slightly different from fixing an APR - for example by adding 10% to the premium. i.e. £500 premium = 10 payments of £55. This can work out inexpensive in ££ terms, but high in terms of APR.

izools

Also it is unlikely that you will be credit checked for the insurance credit, nor will the account appear on your report.

My contents insurance is funded through "Premium Credit" who applied a £1,500 limit and 16.9% apr for the purpose of paying for Insurance Premiums; the account was automatically generated by my insurance company.

No credit check was involved (or their computer would have melted ) and no information appears on my credit report for it.

hax_2

Lozzy0506 wrote: »

Hi I'm new to this so pls excuse any mistakes!

I can't afford to pay my car insurance in one go, so I have two choices:

Do I, 1: Use a credit card which is currently clear with normal interest, to pay it off in one go, and then pay my balance off monthly at around the same amount as I would pay insurance

OR

2: Get a direct debit plan with the credit check and APR from the company and pay monthly.

Is 1 better for my credit score and also going to be cheaper for me or should I go for the credit check and swallow the extra on my premium?

Any help is appreciated!

I'm in exactly the same situation as you are. My insurance company didn't quote me an APR for the monthly payments on my annual reminder letter, but I calculated it using an excel spreadsheet, and I compared it with the APR's on my credit cards.

Could you supply more information, e.g. how much the insurance would be if you pay in full immediately, and how much the monthly repayments would be and over how many months. That way I could calculate the APR (I disclaim any and all liability for this though ).