Insurance question

sebdangerfield

Hi, I'm currently in the process of renewing the insurance on my snotter van.

I've obtained quotes from comparison sites and opted in the details to pay monthly. I've got the quote, £438 is the cheapest and with Kwik fit. I'm happy to pay it in full and went through the kwik fit website to find that the price is now£550.

I called the call centre to ask why the premium has gone up to be told it was because I opted to pay monthly originally, I was given a discount as they would make interest on the monthly payments. When I opted to pay in full the price is inflated as there would be no interest made.

I wasn't aware of this practice before now. My question is I guess, Can I pay the monthly, reduced, premium but pay it off early thus reducing my premium and avoiding paying crazy interest charges? My gut feeling is that if it has interest charges then it must abide by the consumer credit act so I should be able to pay it off early.

Any help really appreciated from those in the know. I'm due to renew on the 26th so I need to act fast!

Thanks again.

UncleZen

Its common for monthly payments to include interest, its like a loan.
Whether you can pay off the "loan" early would be down to the specific T&Cs for the loan.

sebdangerfield

UncleZen wrote: »

Its common for monthly payments to include interest, its like a loan.
Whether you can pay off the "loan" early would be down to the specific T&Cs for the loan.

Thanks UncleZen.

I'm okay with the interest added to a loan for monthly repayments, It's a service and as such attracts a price for it. I just wasn't aware that if I decline the monthly payments and opt to pay in full from the off they just put the premium up anyway!

UncleZen

£438 to £550 sounds quite steep to me though. About 25%.

sebdangerfield

UncleZen wrote: »

£438 to £550 sounds quite steep to me though. About 25%.

That'e the percentage the premium goes up if I pay in full. The interest to pay monthly was 29.9%, which was the reason I wanted to pay in full!

Either way, They're getting the same amount of money in the end.

fivetide

Clear your cookies and look at cashback. sometimes, companies offerign decent cashback mean that a quote coming in at £20 extra can end up being £30 cheaper once that is taken into account.

5t.

Jakg

What i've done in the past:

Pay the deposit (normally 1.5-2x the montly payments).

Pay the full outstanding amount before the first monthly payment, and pay no interest.

I've done it with both Quinn & Aviva, I can't guarantee it works with others but it's worth asking.

thenudeone

sebdangerfield wrote: »

I just wasn't aware that if I decline the monthly payments and opt to pay in full from the off they just put the premium up anyway!

I would have though that they couldn't do that. The APR has to be calculated in a certain way to comply with the regulations. Part of those calculations is the non-credit price i.e. a normal cash price. Otherwise the APR will not reflect the true cost of borrowing, which is what the regulations are there to enforce.

Are you sure that the base price changes purely because of the selction of "payment in full"

I usually works in the other direction. For example a car may have a windscreen price of £1000 but can be bought on credit @ say, 15% APR for 1 year. In reality, a cash buyer may be able to negotiate a huge discount of the windscreen price, which is not offered if bought on credit. So the true cost of credit is hidden.

sebdangerfield

fivetide wrote: »

Clear your cookies and look at cashback. sometimes, companies offerign decent cashback mean that a quote coming in at £20 extra can end up being £30 cheaper once that is taken into account.

5t.

Excellent, thanks very much. I'll try that too.

sebdangerfield

Jakg wrote: »

What i've done in the past:

Pay the deposit (normally 1.5-2x the montly payments).

Pay the full outstanding amount before the first monthly payment, and pay no interest.

I've done it with both Quinn & Aviva, I can't guarantee it works with others but it's worth asking.

This is what I was looking for. I guess I'll just have to check the T&Cs to make sure it's not a problem.

Jakg

sebdangerfield wrote: »

This is what I was looking for. I guess I'll just have to check the T&Cs to make sure it's not a problem.

Usually not listed in the T&C's - I only found out when I asked.