With the cost of motor insurance spiralling by a massive 33%* in 2010 and the average comprehensive policy now costing £843*, drivers can be forgiven for looking around for cheaper insurance. Younger drivers in particular are finding it increasingly hard on the wallet, with 17-22 year olds finding that their average policy will cost them £2,251*.
Drivers are receiving plenty of advice as to how to find cheap car insuranceby using comparison sites or altering their driving habits. There is one thing that all motorists can do to make sure they are not paying over the odds for their insurance cover pay premiums annually rather than monthly. Whilst it might be tempting to spread insurance payments across a year, substantial interest rates can be applied to monthly payment deals.
Looking at prices returned from different insurers on quotes generated through their car insurance comparison website, Tiger.co.uk estimates that the additional cost of spreading car insurance payments equates to an extra £119** for an average fully comprehensive car insurance policy, rising to over £318** on the cost of a policy for drivers under the age of 23. Typical APR rates can be over 40% for some policy providers.
A spokesperson for Tiger.co.uk recommended that drivers take a close look at the credit terms on offer when getting their car insurance quotes and work out whether the additional cost can be avoided or reduced. Some insurers offer more competitive credit terms than others, with at least one provider currently offering an interest-free payment option.
Recognising that many drivers will not be able to afford to pay a single annual insurance premium, Tiger.co.uk recommended that shoppers also consider using a credit card to spread payments: It can save you significant amounts of money if you pay for your car insurance using a 0% purchase credit card. However, remember to pay off your premium before any promotional period expires in order to keep it interest-free. At worst, compare the credit cost of using your existing credit card with the cost of credit provided by insurance providers.
With a great deal of recent focus on spiralling car insurance and fuel prices, it pays drivers to consider some of the hidden costs of motoring.
*Source: AA Premium Index 2010
* Source: Tiger.co.uk, Jan 2011.
For more information visit : http://www.tiger.co.uk
