New research has revealed that spreading the payments for car insurance could be costing you almost £500 more than paying in one lump sum.
The data collated by insurance provider Cuvva highlighted a typical case of a young driver insuring a Ford Fiesta, if they paid up front then then premium would cost £3,975, however spread over 12 monthly payments and the extortionate APR would take the price up to £4,431.
Cuvva’s research investigated the biggest insurance companies in the UK and found that Endsleigh charged customers the highest APR, with customers facing a whopping rate of 39 per cent. The average APR across all insurance companies was 31 per cent, which compared to the average APR for credit cards (21 per cent) shows a shocking difference. The research of 2,000 people found that a third of motorists pay for their insurance premium on a monthly basis, with more than half saying they couldn’t afford to pay in one lump sum.
Freddy Macnamara, CEO at Cuvva, said: “There remains a widespread lack of understanding of financial services and insurance products amongst younger UK consumers, especially when it comes to repayment plans linked to car insurance.
“This education gap is not only being inadequately addressed but many providers continue to benefit from the lack of transparency towards its customers. This is something that must be curbed, and new, more progressive players in the market can play a large part in shaping this.
“As consumers naturally look for savings and flexibility in 2021, the industry must adapt.”