Paying insurance yearly - what happens if you buy a new car??

jakiphoto

This might be a silly Q but Im being quote £690 yearly or £980 monthly for my insurance. It seems the most sensible option would be to pay it all on credit card and pay it off monthly from that.
But im thinking of buying a new car in about 6/8 months so how does this work for my new car? will the insurance company just charge me extra or do you have to cancel the insurance and get charged a fee?

warwicktiger

You ring the insurer, advise them of a change of vehicle. There may well be an admin fee and an increase in premium for the remainder of the year depending on the types of car involved

forgotmyname

The first thing you do BEFORE buying the car is see if your insurer will cover it and how much extra will they want.

Change in premium + admin fees maybe worth waiting until the policy ends before changing cars. Or maybe worth cancelling and going elsewhere.

Plenty of complaints from people that change cars and get stung by the insurance. Your a captive customer. They know your going to lose out no matter which way you go.
Some companies are better than others.

Paying the insurer monthly can be quite expensive. Some charge silly amounts of interest so you usually save a fair bit paying in one go.

Charges will vary from £15 to £75 just for the admin fee and then the premium change. Someone recently posted because they got stung for £300.

mum2one

it depends on the company how much admin charges are
I took policy Dec 2012 - changed car in Jan 2013 - got charged £86 extra (£25 admin and rest the difference in policy)

Yet Dec 2013 - the renewal was cheaper than it had been for the car I Insured in Dec 2012

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My father he took his ins June 2012, he had my car in Jan 2013 - when we rang his policy the charge was £25 for the remainder of the policy.

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Its one of those things I hadn't planned on changing cars it just happened x

thenudeone

Are you sure the £980 is for a monthly policy?

Many monthly-payment policies are actually annual policies linked to a separate loan for the annual cost, repaid monthly; leaving you in exactly the same position as if you'd bought an annual policy, expect with interest charges on top.

Aretnap

thenudeone wrote: »

Are you sure the £980 is for a monthly policy?

Many monthly-payment policies are actually annual policies linked to a separate loan for the annual cost, repaid monthly; leaving you in exactly the same position as if you'd bought an annual policy, expect with interest charges on top.

This is correct except that I'd say "virtually all" rather than "many". It's a common misconception that by paying monthy you can just cancel the direct debit at any time, and call it quits. In fact you still have to pay off the loan which you took out to buy the policy, so you may well still end up owing money once a cancellation fee has been deducted from any refund on the policy itself.

If you can afford to pay for an annual policy up front, there s no advantage at all to paying extra by paying monthly. Even iff you can't, you can often get he credit cheaper elsewhere, eg from a bank or even on a credit card. An ahead advantage of that is that if youmissa payment you get a nasty letter from your credt card company rather than having your insurane cancelled.

A genuine monthly policy would fall into thcategory o short term insurance and would be much more expensive than an annual one. Either check that the insurer will cover your new car for a reasonable amount, rmembering that prices may well have changed by the time you buy it, or choose a policy with a low cancellation fee, which probably on't be the one with the cheapest headline price.

forgotmyname

Some of the interest rates are shocking for paying your premium monthly. My previous insurer charged approx £60 on a £500 policy.

But some charged well over £100. Recently looking for quotes for a newly qualified 18 year old driver and paying monthly made hundreds of £ difference.

InsideInsurance

jakiphoto wrote: »

This might be a silly Q but Im being quote £690 yearly or £980 monthly for my insurance. It seems the most sensible option would be to pay it all on credit card and pay it off monthly from that.
But im thinking of buying a new car in about 6/8 months so how does this work for my new car? will the insurance company just charge me extra or do you have to cancel the insurance and get charged a fee?

As others have said, these are both annual policies just with one they are arranging a loan for you to pay it by installments and so there is interest added to the cost.

If you change your vehicle you either have to do a mid term adjustment to change the vehicle on cover and most likely pay an admin fee. Alternatively you cancel the policy and buy elsewhere but then you have a cancellation fee to pay and lose the few months of NCD you'd built. So both ways you need to check the fees before buying.

Be a little careful of pricing if looking at a broker or other intermediary. They may come out online as cheap for two different vehicles but that could be they are placing different vehicles with different insurers but once you buy you are locked into one insurer and so the MTA could turn out to be more expensive than you think