Car Insurance Monthly or Annually

gazfocus

Looking for some advice really.

My car insurance is due for renewal at the end of the week and I've also got a new car so I've decided to cancel my existing insurance altogether and start again with a completely new quote.

My insurance is coming out at £450.31 for the year or I can pay a deposit of £115.06 and monthly installments of £41.34 (so a total of £528.46).

I'm just trying to work out whether it's best to pay my insurance all in one go or pay the monthly installments. If I pay it in one go, obviously, it's £80 cheaper over the year, but if I pay it monthly, I'll have a 'technically spare' £335 in my bank in case of emergencies (the monthly payments would not be an issue either way).

Any thoughts?

InsideInsurance

What APR are you talking about? Most insurance APR is very high for installments and so if you can afford to pay it in one you are much better to do so.

If the emergency doesnt happen then the APR is certainly massively higher than the AER on your savings

If the emergency does happen and your have a reasonable credit history then a credit cards APR will almost certainly be lower than the APR for the installments. (eg my credit card is 14.9% but most insurers are around 24% interest)

gazfocus

InsideInsurance wrote: »

What APR are you talking about? Most insurance APR is very high for installments and so if you can afford to pay it in one you are much better to do so.

If the emergency doesnt happen then the APR is certainly massively higher than the AER on your savings

If the emergency does happen and your have a reasonable credit history then a credit cards APR will almost certainly be lower than the APR for the installments. (eg my credit card is 14.9% but most insurers are around 24% interest)

Thanks. Definitely good idea to check the APR. I've just checked and the APR on my insurance looks pretty reasonable...14.75% plus a £25 Finance fee. My credit card's APR is about 30% (Capital One unfortunately).

InsideInsurance

gazfocus wrote: »

I've just checked and the APR on my insurance looks pretty reasonable...14.75% plus a £25 Finance fee. My credit card's APR is about 30% (Capital One unfortunately).

If it is plus a fee then that is the interest rate and not the APR as legally APR factors in any fees as well as interest. The actual APR should be clearly stated as is required. Which broker/ insurer is it?

gazfocus

InsideInsurance wrote: »

If it is plus a fee then that is the interest rate and not the APR as legally APR factors in any fees as well as interest. The actual APR should be clearly stated as is required. Which broker/ insurer is it?

That's the only percentage mentioned. Even looking at the quote online it doesn't state an APR. The insurer is Octagon Insurance.

InsideInsurance

I am not a compliance guru but I am fairly sure they are supposed to (but clearly dont).

I'd suggest googling feedback on them anyway as they dont always have the best reputations

zeon999

Personally I always pay annually simply as I hate paying interest on anything so in cases where I can easily choose not to its an easy decision for me.

gazfocus

InsideInsurance wrote: »

I am not a compliance guru but I am fairly sure they are supposed to (but clearly dont).

I'd suggest googling feedback on them anyway as they dont always have the best reputations

Was insured with them last year and they're by far the cheapest for me so not an option to go with someone else I'm afraid (we're talking £300 cheaper).

dunstonh

you are effectively asking us whether it is better to pay more or pay less.

Do you really need an answer for that?

gazfocus

No I'm not. I'm asking whether its better to pay a bit more over the course of a year for the benefit of having spare cash in the bank.

rs65

On a money saving site, its best to pay less.

Whether its better for you to keep cash in the bank is entirely personal to you.