Car Insurance - Instalments or Not?

reliquit

In an answer elsewhere on this forum, it was suggested that you should not pay car insurance by installments as the implication that you could not afford to pay it in full would be regarded as detrimental if you were applying for further credit, but I have always believed that if (like me) your history is less than perfect, then an insurance account with no late/missed payments was a good thing to have on your credit file. As I am just coming up to renewing mine, what is the majority view on this?

Whalie

While it is good on a tight budget, if you can afford to pay outright then do so to avoid paying 'interest' or 'credit cost'.  If you can get the instalments interest free then that is a different matter!

cymruchris

If they are interest free instalments - then I don't see why you wouldn't go for that option - but if the price is higher by taking the instalments - you're better off paying in full if you have the means to do so. 

cattom

I all ways pay mine all up front, because I hate the thought of paying extra money doing it in installments. as for it affecting your credit rating, as long as its payed one way or the other, I don't think it will matter.

reliquit

I get that paying in full will save me the credit charges, but I was really wondering if paying by installments had any positive or negative impact on "perceived credit-worthiness". Or is the answer "It depends...."?

cymruchris

reliquit said:

I get that paying in full will save me the credit charges, but I was really wondering if paying by installments had any positive or negative impact on "perceived credit-worthiness". Or is the answer "It depends...."?

It probably depends on your wider credit profile. If you have lots of available credit over multiple accounts that have been longstanding for many years, I think the impact would be negligible. If you had one sub-prime credit card with a limit of £400 and a balance of £394 - then I think it would have a greater impact (negative).

2021BJ

reliquit said:

I get that paying in full will save me the credit charges, but I was really wondering if paying by installments had any positive or negative impact on "perceived credit-worthiness". Or is the answer "It depends...."?

The impact is likely to be negligible.  Paying to improve your credit file is foolish.