Car insurance premium differennce between annual and monthly payment

neilmcl

I got a car insurance quote today via one of the price comparison sites and noticed that if I specified a monthly payment schedule a net annual premium was displayed which was considerably lower than the annual premium if I specified to pay the premium up front in full.

For example,

Monthly payment annual premium: £264.97 (Total 349.40)
Full payment annual premium: £315.97

I always thought the annual premium (net) would be the same whichever way you chose to pay and the only difference would be the higher total figure for the monthly payment plan. Is this normal?

Edit: I've just noticed that not all providers do this. Some, for example LV, have the same annual premium but the one that was cheaper for me - kwik-fit seem to charge an extra £51 for the "privilage" of paying in full.

paddedjohn

I had one last year where paying monthly cost a total of £700 odd and if I paid in a lump sum it was around £1100, work that one out.

opinions4u

Not always like to like with legal expenses insurance, NCD protection, breakdown cover etc.

kingstreet

Is it the deposit?

You normally pay a few months upfront.

As that isn't included in the "loan" it should be listed separately.

neilmcl

kingstreet wrote: »

Is it the deposit?

You normally pay a few months upfront.

As that isn't included in the "loan" it should be listed separately.

No, I've taken that it account. I'm not disputing that the gross annual premium should be higher for the monthly payment when you take into account interest, fees etc. I'm talking about the "net" annual premium for the monthly payment. In most cases this is the same for both monthly and annual payment but on the Kwik-Fit quote the annual premium is much lower on the monthly, giving the initial impression it's the better deal, until of course you look at the gross figures.

It's just a bit of an oddity and I was wondering why they did it, or maybe it's something to do with the comparison site.