Car insurance costs could be dramatically cheaper by paying their yearly charges in one go due to increased interest rates. Many insurance companies will add between 6.8 to 17 percent added interest to total charges if they opt for monthly payment plans.
The study from GoCompare found motorists pay an average of £55 more per year for cover than those who settle all costs in one go.
However, this bill can increase to £257 for inexperienced motorists who have not proven themselves to be a safe driver.
Despite the added costs, one in three motorists in the UK decides to pay their policy every month to spread total charges.
Lee Griffin, Chief Executive of GoCompare said: “The added danger here is that people paying monthly are statistically more likely to renew again with the same insurer, without checking the total cost.
Annual polices can be up to £250 cheaper
Motorists can save by paying charges up front
“It can become a cycle of paying more, for people who can least afford to do that.”
MoneySuperMarket has put the price difference between monthly and annual premiums…
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