Car insurance on the rise as Britons budget their money
Monthly car insurance is on the rise as Britons budget their money
- A third of drivers in the UK now pay for car insurance monthly.
- Survey reveals drivers are turning to monthly cover because they can’t afford the annual lump sum, and find spreading payments over the year easier and more convenient to manage.
- Younger drivers between 25 – 34 years old are 57% more likely to pay for cover monthly than drivers aged 55+, falling into the APRs trap.
- Three tips to make monthly car insurance work for you.
A survey reveals Britons are turning to monthly car insurance payments as an alternative to a large annual lump sum. Around a third of drivers in the UK now pay for car insurance monthly. With around 32 million registered cars on the road that equates to over 10 million drivers.
Following a difficult financial year for many, the monthly car insurance trend is on the rise, suggests flexible car insurance provider, Cuvva as Britons find it easier to budget their money with regular payments.
In 2020, the average premium for a car that is more than 10 years old was £1,520.00, according to data from CompareTheMarket.
Andy Tomlinson, COO at Cuvva said: “People want simple financial products that suit their needs. Millions of drivers no longer want to be tied into long annual car insurance contracts or be faced with big upfront payments.”
According to a Censuswide survey, of the drivers that pay monthly, more than half (51%) choose monthly premiums because they can’t afford to pay one lump sum. In addition, people are drawn to monthly car insurance over annual cover because they find it more convenient (41%) and can manage the cost more easily (37%).
For some, monthly car insurance means higher premiums because most big insurance providers charge interest with APRs as high as 39% for the convenience of paying for annual cover in monthly instalments.
The survey also found that compared with drivers aged 55+, younger drivers between the ages of 25 – 34 are 57% more likely to pay for cover monthly due to the higher premiums they’re faced with as a result of less time behind the wheel.
“Not only are younger drivers penalised with higher premiums for lack of driving experience but they’re also slammed with APRs on top, which is totally unfair.
“On a mission to make insurance radically better, Cuvva launched subscription car insurance with rolling monthly policies without APRs, deposits or cancellation fees. We want to change insurance for good by making it flexible, fair and give younger drivers more control,” says Tomlinson.
If you’re thinking about monthly car insurance, here are three useful tips to make sure you benefit and save on your car insurance premiums.
Beat the monthly APRs trap
For many, it’s easier to manage the cost of car insurance in monthly instalments and easier to budget finances with regular payments instead of one large lump sum.
If you spread your payments over the year, you can save as much as £500 on your car insurance by choosing a provider that doesn’t charge interest on top of a premium. Cuvva and NFU Mutual are some providers that don’t charge APRs.
Shop around for the right level of cover
Shop around to find the best cover that suits your needs. When it comes to insurance, cheap isn’t necessarily the best option. “You can land up paying far more in the long run if you’re unlucky and need to make a claim but don’t have the right level of cover in place,” says Tomlinson.
In addition, revisit your car insurance add-ons and drop the ones that you no longer need if you’re working from home and are driving far less.
Watch out for sneaky fees
Most insurers charge cancellation fees. On average you can be charged £55 to exit your policy early but in some cases, it can be as high as £155. Not all insurers charge cancellation fees. It’s always best to confirm with your provider before you accept a quote.
Article by Cuvva