Car Insurance monthly vs paying in full

Spoonhead88

Hello,

My Car insurance is coming up at the end of the month. The best quote i can get is £1375 for full comp. I don't have that kind of cash but i do have an overdraft that would cover the full amount. Should i use my overdraft or just pay it monthly and a small extra cost?

Thanks

Shenanigan

How much will the insurer charge for monthly payments and what is your overdraft charge?

Ask the insurer for an APR equivalent of the monthly charges, or perhaps even a flat rate like 10% on the premium (eg £1375 would mean an additional £137.50).

Then find out how much you're charged in your overdraft and you may be able to compare the two.

Just_Some_Guy

Compare the APR on the overdraft versus the insurance monthly payments. Many overdrafts charge you flat fees instead of or in addition to plain old interest; for these overdrafts the published APR is meaningless and you basically have to calculate it yourself (which sucks!)

Very roughly, if you get charged £1/day for overdraft and you pay £1,375 off evenly throughout the year, the overdraft will cost you 50% APR (ish).