Do car insurance companies do credit checks?

raffyrafs14

My credit isn't perfect and I've taken insurance out today, I have received my documents etc online but I didn't realise that the company uses premium credit for the financial part of things. So now I've been given an account with premium credit and currently my agreement status is showing as balance paid on premium credit account. I am meant to receive welcome emails and have to sign the agreement but nothing of that sort has happened yet. I do have access to my premium credit account as I was given the details from my insurance company when I contacted them earlier today. They did say my agreement had been set up and by viewing my account on their website it is showing up on there but not giving an option to sign. I am just worried as I have bad credit will my insurance be cancelled or will it take a few days and I should receive the welcome emails and the button to sign the agreement on my premium account soon? I've also set up my insurance so it starts on the 20th if that helps.

BTW i've set the insurance as paying monthly.

Thanks in advance

Quentin

They do credit checks.


Hopefully they did yours prior to offering you the policy (paid monthly) and there is nothing to worry about.

enjoyyourshoes

Just check out how much you are now paying for the credit. Its best to save monthly for the renewal and pay ALL insurances in one go. You will be really surprised how much you will save.

raffyrafs14

Quentin - thanks for that, I too am hoping the same as I don't see why they would have offered me the insurance and sent documents to me and that too with details of creating an account with premium credit....if they was going to decline my insurance.

A few places I've checked have mentioned they do a check just to see if you exist and match the name and address given. I'm hoping thats the most they check and not go into detail as like mentioned before my credit isn't great.

But then again it's only insurance so I don't see how they will be at loss, all they have to do is cancel the policy for any non-payments right?

enjoyyourshoes - the price is still showing the same as quoted when I purchased the insurance so hoping all is going well, if i could afford the whole sum I would have paid that long ago.

forgotmyname

If they cancel the policy they may still be at a loss though.

I had no issues with paying in installments when i had issues.

raffyrafs14

forgotmyname wrote: »

If they cancel the policy they may still be at a loss though.

I had no issues with paying in installments when i had issues.

was your credit bad too or?

InsideInsurance

When you take out 99% of general insurance the premium is payable immediately. If you ask to pay by installments you effectively get a loan to cover the immediate premium payment and then repay the loan in installments.

The biggest companies, and particularly direct insurers, self finance this loan and so everything comes in one brand name and hidden away in the paperwork will be a credit agreement. Smaller brands, and in particular brokers, often use third party credit providers like Premium Credit and so the loan element becomes more high profile.

Unless a 0% APR promotion is being ran then the APR on premium credit tends to be terrible, often nearing 30%, which for a loan puts it firmly in the sub prime space. As such insurers can afford to be a little more lax in their checks than a bank who'd be offer prime/ average customers an APR closer to 6%

Some companies do basic ID checks and thats it, some companies do a very basic credit check for the purposes of deciding if to offer credit or not and in these cases they are looking for a valid ID and ensure you have no CCJs etc. Some insurers do actually get your credit score, one of the very few real uses of the things Experian and co try to flog you, but dont use it to do with credit but instead adjust your premium (ie if you're in dire credit situation you may be a fraud risk so increase the premium)


I've not known a brokers system that would allow installments to be offered if the applicant doesnt meet the criteria for installments so if you were offered it then it should all be fine but worth checking as mistakes can happen

forgotmyname

I was off work on sick pay alone.. Credit card companies refused to help when i first contacted them. Wouldnt do anything until i had missed the payment then insisted i pay a sum of money i didnt have before they would "help" me.

It backfired on them because i turned the phone off and ignored the letters. My illness lasted much longer than expected and the debts got passed on.

Yet my insurance auto renewed on a monthly payment as normal and the following year i swapped insurer and still got a monthly payment plan.

This was approx 8 years ago now though. So things may have changed. Now i always pay in one go because you can save £60 - £80 usually.

Have you seen how much interest they charge?

raffyrafs14

forgotmyname wrote: »

I was off work on sick pay alone.. Credit card companies refused to help when i first contacted them. Wouldnt do anything until i had missed the payment then insisted i pay a sum of money i didnt have before they would "help" me.

It backfired on them because i turned the phone off and ignored the letters. My illness lasted much longer than expected and the debts got passed on.

Yet my insurance auto renewed on a monthly payment as normal and the following year i swapped insurer and still got a monthly payment plan.

This was approx 8 years ago now though. So things may have changed. Now i always pay in one go because you can save £60 - £80 usually.

Have you seen how much interest they charge?

The interest is 14% but all in all I was quoted around £1200 including this fee and I'm 22 years of age and the car is a 2 litre diesel, so the price I am not too worried about as long as I can pay it monthly.

Anyway I have had an update today and the button to sign the agreement did appear and I have signed the agreement to pay. The insurance company also phoned me today to let me know all has gone through and they wanted to offer me optional extras and in which i took on 1 extra which put my monthly premium up by £6 which I was happy to go ahead with.

Hopefully all should be sorted now as I have signed the agreement and hopefully both insurance and broker are happy with.

Thanks guys for your replies it has helped me learn more about insurance companies and credit checks.