Insurance different if paid by DD?

marywooyeah

Hi, have just managed to get a quote down from £2,200 to £1200 but it says in small print that the price may vary if you pay by direct debit - does anyone know why this is or what the likely variation is to be?
I cant ring them as its out of office hours, I just thought it would be the policy quote divided by 12!

wealdroam

If you are talking about paying monthly by direct debit, most insurance companies add an amount of interest to pay for the credit.

If you are paying annually by direct debit, then obviously no interest will be added and some insurers may even offer a discount if paying annually by direct debit.

paddedjohn

as the above poster says, the insurance company will charge you for credit if you spread the payments out.
Be careful though because my daughter was quoted £695 plus £85 credit charge so she offered to pay the £695 in full and was told this would cost £1200. ??????????????????????

attila_

the usual figure is around 13% increase.

robbies_gal

they always add interest its never just the quote divided by 12-i got a quote of 750 have to pay back around 900 altogether but i jsut didnt have it as a lump sum-not alot you can do unless u have a cc then pay it back on that instead

marywooyeah

thanks for the replies, I spoke to them this morning and was told that the interest was 18.6% so the £1243 quote would work out as £175 per month = paying back around £2100! I eventually opted for 3rd party f&t for £1100 and paid it in a lum sump. Set up a DD to pay £103 per month from my wages back into my savings so in 12 months I will have paid myself back the £1100 and effectively saved a grand on what I would have been paying if I had paid it monthly.

think thats the best I'm going to get having only held my licence for a week!

mikey72

marywooyeah wrote: »

thanks for the replies, I spoke to them this morning and was told that the interest was 18.6% so the £1243 quote would work out as £175 per month = paying back around £2100! I eventually opted for 3rd party f&t for £1100 and paid it in a lum sump. Set up a DD to pay £103 per month from my wages back into my savings so in 12 months I will have paid myself back the £1100 and effectively saved a grand on what I would have been paying if I had paid it monthly.

think thats the best I'm going to get having only held my licence for a week!

I make that an APR of 110%, if you repay an extra £857 over the year for a £1243 loan.
Probably best to avoid that offer.
Who was it?

paddedjohn

how do you work it out to 110%? surely its nearer 66%

marywooyeah

the operator told me it was 18.6%, I didnt think it sounded right but am not good at mental arithmetic so just thought the overall price sounds high so I'm not going for that! It was Admiral, then Elephant, then another one (Bell maybe?!). The last one I asked if the above named were all the same company as the recorded message at the start was identical and the operator stated that Admiral was the parent company and they were sister companies.

It does seem like a heck of a lot more for paying by DD though.

wealdroam

marywooyeah wrote: »

It does seem like a heck of a lot more for paying by DD though.

You are looking at the issue wrongly.

You are being charged extra because you will be paying in monthly instalments.

Direct Debit just happens to be the payment mechanism used.

As I indicated earlier, it is quite possible, and indeed common, for Direct Debit to be used for annual premium payments too.

mikey72

paddedjohn wrote: »

how do you work it out to 110%? surely its nearer 66%

You pay back some of the capital each month, so although it is another 66% on top overall, the original sum has been decreased month on month, so not all the money is borrowed for the year.