Despite paying more for coverage, car insurance customers choose monthly policies.
Customers prefer monthly car insurance policies over annual policies, despite the risk of paying more for coverage, according to a Cuvva study.
As drivers recover from a terrible financial year, experts warn that the transition to monthly policies is “on the rise.” According to Cuvva, almost a third of drivers in the UK, or about 10 million people, pay for auto insurance on a monthly basis.
Cuvva’s COO, Andy Tomlinson, stated that drivers “no longer want to be shackled” to annual contracts.
“People want straightforward financial products that meet their needs,” Mr Tomlinson added.
“Millions of drivers no longer want to be locked into long-term vehicle insurance contracts or pay large upfront premiums.”
“Younger drivers are not only penalized with higher premiums for their lack of driving experience, but they are also pounded with APRs on top of that, which is completely unfair,” he continued.
More than half of road users who pay every 30 days claimed they couldn’t afford to pay in one single payment, according to a recent survey.
A total of 41% of road users stated that they choose monthly coverage since it is more convenient.
Monthly payments, according to 37%, are preferable because they make it simpler to manage the high prices.
Cuvva specialists, on the other hand, advise that drivers who sign up for monthly vehicle insurance would certainly spend more.
This is due to the fact that most large insurance companies add interest on top of monthly payments, with some rates reaching as high as 39%.
MoneySuperMarket also cautioned drivers who choose to pay monthly that they will be subjected to a credit check, since insurers effectively lend money to road users to cover their insurance costs.
Drivers with poorer credit scores may face greater fees since they are perceived to be less likely to pay on time each month.
“There is a fundamental disadvantage to monthly payments, however: paying by instalment usually raises the total cost of insurance above what it would be if you paid all at once,” they stated.
“Because the vehicle insurance company is basically lending you the money to pay the premium, it will charge you interest on the payments you make over the course of the year.
“If you want to pay in installments, your insurance company will do a credit check to evaluate how you’ve handled debt in the past.”Brinkwire Summary News.”