car insurance - pay monthly?

chilli_dog

anyone no of any car insurance companies that dont charge to pay monthly?

im seeing interest rates of around 20% for the privilage of paying monthly.

FlameCloud

Virgin dont, or didnt used to last month when I checked.

dunstonh

Does it matter if they charge for the credit agreement or not? Surely the important bit is the bottom line which you pay.

ic

Rather than pay the high APRs that insurance companies charge (a quote in front of me offers it for 34% APR) why not take out a 0% on purchases for one year credit card, buy on one credit card then transfer to another, or extend your overdraft to cover it (most online current accounts typically offer overdrafts with a 6% APR). A loan could be an option, but only if your insurance will cost over £1000.

Whichever way you go, it'd be cheaper than paying the fees that insurance companies ask for.

However, if you were to make a claim where the car is written off, if you pay monthly they would reduce your payout equal to what you owe for the rest of the year's insurance, whereas if you pay in full, you'll be paid more but you'll still have to pay the loan/overdraft/credit card. Of course you could use part of your payout to pay off the amount, but worth baring in mind.

MarkyMarkD

I agree (as usual) with dunstonh. Also, companies which do not charge extra for monthly payments are very unlikely to be the most competitive in the first place.

It's almost always going to work out cheaper to get your insurance from the cheapest provider, and pay in full up-front even if this means borrowing the money on your overdraft or credit card if necessary.

If you really have an awful credit rating meaning that you can't borrow cheaper than the insurers, then obviously borrow from them. But that's a tiny minority of people.

People tend to imagine (wrongly) that there is a benefit in paying monthly because they can cancel and walk away, or they won't have to pay the remaining monthly instalments if their car is written off. Neither is true. It makes no difference whether you are paying annually or monthly - it's an annual insurance policy. Paying monthly simply means that you are buying both insurance and a (generally very expensive) loan.