Warning for drivers paying for car insurance monthly not annually

Drivers who pay for car insurance monthly rather than annually may be charged nearly 30% more, according to a new analysis cited by consumer group Which?. The study found nine insurers apply an annual percentage rate of 29.9% when customers choose to spread premiums instead of paying a lump sum. Rocio Concha, policy director at Which?, said monthly customers can be paying interest rates comparable to expensive credit cards. The ABI said premium finance is widely used and that charges should be fair, transparent, and tied to insurers’ genuine operational costs, including keeping cover active during payment delays. The FCA’s market study also noted premium finance can deliver fair value and that overall premium finance costs have fallen since 2022.