Monthly Premium Interest
Some road users find that it’s more convenient to pay for their annual premiums by monthly direct debit, especially if a car insurance package is expensive to begin with. Some car insurance companies offer free monthly payments and never charge any interest for direct debit facilities. However, others carriers can charge out monthly payments at highly uncompetitive rates; the APR with some companies was as high as 38%. Monthly payments shouldn’t rule you out of what could be an otherwise exceptional policy, but you should always consider whether it might be a better option to borrow the money at lower rates of interest instead of paying for the entire premium in monthly stages. If you use a bank overdraft or credit card to pay off your car insurance premium in a single lump sum, you will only have pay interest back on the loan until you have reached a stage where you can afford to pay the money back. If you sign up to monthly payments as part of an agreement with your car insurance provider, remember that you will be obligated to pay a full year of interest charges.
The Which Money Magazine survey investigated 151 different car insurance providers and found that 105 of them applied a charge for amendments made to a policy. Amendment charges can cover simple changes such as adding an extra driver to a policy or changing address after a house move. If you plan to move in the near future, it could be worth looking at amendment charges now and opting for a short-term car insurance deal until the transition is complete.