DMP and car insurance

BuzzyBees101

Hi I’m considering a DMP and I’m just wondering about car insurance. I normally pay monthly and you need credit to do that. If I have a DMP I’m guessing I won’t be able to pay car insurance monthly due to poor credit? I don’t think I’d be able to pay a full year up front. Is this right, anyone had experience of being in a DMP and being able to afford car insurance? 

I need the car for work or I’d just get rid. 

Any help would be greatly appreciated

fatbelly

We recommend that you save an emergency fund ahead of starting a dmp.

Make yours an emergency and car insurance fund, and then once in the dmp, put a monthly amount away each month for car expenses.

DullGreyGuy

BuzzyBees101 said:

Hi I’m considering a DMP and I’m just wondering about car insurance. I normally pay monthly and you need credit to do that. If I have a DMP I’m guessing I won’t be able to pay car insurance monthly due to poor credit? I don’t think I’d be able to pay a full year up front. Is this right, anyone had experience of being in a DMP and being able to afford car insurance? 

I need the car for work or I’d just get rid. 

Any help would be greatly appreciated

It varies by provider... a direct insurer that self funds the credit is probably the most likely to offer monthly instalments, at the other extreme a broker who uses an external credit provider is the least likely. At the end of the day it's not like a seller of physical goods, they can cancel the product and cap their losses if you default. 

That said, given the increased focus on irresponsible lending, in part thanks to sites like this, more insurers are taking the offering of credit more seriously as they dont want years of claims from people who come back saying it was irresponsible lending. 

Rob5342

I hsve four defaults and I've never had any problems being able to pay for them monthly. It's no risk to them at all, if you miss a payment then they can just cancel your policy and have lost nothing. Aviva used to let you pay on a rolling monthly basis with no credit agreement, I don't know if they still do. 

BuzzyBees101

Rob5342 said:

I hsve four defaults and I've never had any problems being able to pay for them monthly. It's no risk to them at all, if you miss a payment then they can just cancel your policy and have lost nothing. Aviva used to let you pay on a rolling monthly basis with no credit agreement, I don't know if they still do. 

Ahh yes I didn’t think of it that way about them not loosing anything because they can just cancel. It’s great to know that it will be doable. 

Thanks for your help 

DullGreyGuy

Rob5342 said:

I hsve four defaults and I've never had any problems being able to pay for them monthly. It's no risk to them at all, if you miss a payment then they can just cancel your policy and have lost nothing. Aviva used to let you pay on a rolling monthly basis with no credit agreement, I don't know if they still do. 

Aviva is a direct insurer.

If you buy from ABC Brokers and your policy is £1,000 then within 28 days they have to pay over £950 to the insurer XYZ no matter how much you have or haven't paid them. If you cancel the policy then what they get back depends on their commercial terms for which there is no statutory right of cancellation however they have to pay you back the premiums within 14 days despite the fact the insurer may have 28 days or more to refund. At a minimum its a major cashflow challenge

Picture is actually vastly more complex however as you buy on 1st Jan, you run over a bunch of school kids on 2nd Jan and after the deposit bounces on the 10th Jan they cancel your policy. They are however the RTA insurer for the accident on the 2nd Jan so have to pay out the £500,000 in injuries. Technically they have a right of recovery against you but this is someone who's payment for £75 bounced so what do you think the chance they get half a million back from you? But as you say, they've lost nothing. 

Direct insurers, as already stated, used to be more relaxed as in principle they can cancel the policy to limit their liability. However with sites like this promoting complaints about unaffordable lending the reality is that companies are tightening the net because dealing with the occasional £0.5m claim is one thing but dealing with millions claiming unfair lending is vastly worse.