Published on July 7th, 2014 | by neil0
How Should You Pay For Your Car Insurance?
If you own a car, you will have to pay for insurance. Unless you declare your car to be off the road, you have a legal obligation to insure your car. Failure to do so can result in massive fines from the DVLA!
We all know that car insurance is a necessary evil. Some people pay more for their car insurance than others. But have you ever wondered what is the best way to pay for it? Today’s handy guide will discuss the various payment options open to you.
Annual lump sum
Car insurance firms, and the motor industry in general tell us the cheapest way to pay is once a year. The problem with paying a lump sum on an annual basis is that it can be too expensive for a lot of motorists.
Learner drivers or those that have recently passed their test will find that insurance costs a small fortune. And if you have endorsements on your driving licence, you can bet that your car insurance won’t be cheap either!
But if you can afford to pay for your car insurance on an annual basis, this is the best way forward. By doing so, you won’t incur any fees from the insurer.
Monthly direct debit
A cash flow-friendly way to pay for car insurance is to spread the cost over a year or ten months, depending on the policy chosen. Many people in the UK choose to pay for their car insurance by monthly direct debit.
It enables them to budget for their car insurance on a monthly basis. And it means that they don’t have to pay the entire premium cost up-front. If you choose to pay for your car insurance by direct debit, bear in mind that you will have to pay interest and other fees on top of your premium.
0% credit card
Do you want to pay for your insurance on a monthly basis? Are you put off by the interest charges? A savvy way to get around that problem is to pay for your insurance on a 0% credit card, according to Carl from Motorpoint!
If you have a good credit rating, you will have no problem getting a credit card that offers a 0% introductory rate for 12 months.
Just make sure that you pay off the balance of the credit card before the 0% rate expires. Otherwise, it can cost you more than paying your insurance by direct debit!
If you find that your car insurance is in four-figure territory, it might be best to take out a loan to pay for it. Car insurers are reluctant to let you pay by direct debit for such high amounts, and so they will charge you stupid amounts of interest.
Many people in that predicament find that it is more-affordable to take out a personal loan and pay it off over a period of 12 months. Bear in mind that some lenders won’t give you a loan unless you take it out over a longer period. But that doesn’t stop you from settling the loan early.