Just a quick note for those motorists who are looking to pay for their next car insurance policy by Direct Debit (DD).
At first sight paying for your policy by (DD) can seem like an attractive option, enabling you to spread the cost of the cover over the year. Be wary though and don’t just dive into the first offer you receive as some companies and insurers will charge you through the nose for the convenience of paying them in monthly instalments!
Using DD to spread the cost – could mean that your motor insurance cover costs up to 20 per cent more. Around 83 per cent of motor insurance policies charge interest if you pay by direct debit, with 8 per cent not stating whether you will be charged until you get a quote. The average APR is 21.27 per cent but the top rate is 37.12 per cent, charged by Provident, which could add £283 to the average fully comprehensive premium of £762.
You may be better off paying for your car insurance in a lump sum or using a low-interest credit card, which you can pay off at a lower rate than the one offered by your insurer.
Extracts from The Telegraph Online.