Car insurance showing as a personal loan?

Mon2907

Hi,

I’m checking my credit files ahead of our mortgage application. All general accident was showing as a personal loan? It’s a direct debit for my car insurance that I pay monthly. I’m not sure why it’s classed as a personal loan? 

I am quite dim when it comes to this so appreciate that there could be an obvious answer.

Credit file detail looks healthy - no missed payments, defaults. No CCJs etc. Anything else I should be looking at? I know to ignore the score...!

Thanks. 

Mon2907

Should mention this was on a TransUnion credit file. 

onlyfoolsandparking

It's classed as a loan because it is a loan. If you pay for car insurance monthly the insurance company 'loan' you the money (at a high rate of interest usually too) then you pay them back. Much better to pay the premium in full, it's cheaper AND doesn't go on your credit file.  

GrumpyDil

Need to check your original agreement as I'm pretty certain it's because the facility to pay by direct debit in essence involves lending you the money to pay the policy and then gets reported as a loan. 

Mon2907

That makes sense, I didn’t think this through clearly - just saw it as a direct debit not the actually fact they are lending me the money. Hoping it doesn’t effect things too much. Thanks for both replying. 

Thrugelmir

To pay in monthly installments you enter a full credit agreement. 

Ebe_Scrooge

Mon2907 said:

Hoping it doesn’t effect things too much. Thanks for both replying. 

Depending on the rest of your finances, it may actually be a slight bonus on your credit file - it's one more line of credit that you've (presumably) always been repaying on time, which is a good sign to most lenders.  It'll not make a huge difference either way, though.  But as a previous poster said, it's always a very expensive way of borrowing money - much better to pay in a single annual premium, irrespective of any effect it may have on your credit history.