Paying monthly bad?

Question

i want to buy cheap car insurance

i would rather pay monthly as we dont have the full amount.

but i read that :-

the insurer actually loans you the annual cost and charges you interest for the privilege usually the rates are hideous. So either pay it off in full or repay a credit card with 0% interest

my quote was only £30 a month, which id be happy paying back or will they charge me more? i thought that this was paying for the actual insurance?

is it ok to pay monthly or not?

help

Answer 1

You pay a little more but it's in easily payable installments, so good and bad.

Answer 2

Well, like you said, paying with a credit card would be better but be sure that theyre not gonna charge you 2% for using a CREDIT card (i had this a few years ago so i chose to pay it in one go).

Just compare the monthly cost and the annual lump sum to see how much it will cost ya!

Insurers tend to charge between 20-30% APR (for the extra admin fees they claim, yeh right) which is a bit extreme if you ask me so do a couple of calculations, you might find its not gonna cost you too much. Remember APR means you pay interest on your outstanding balance (you dont pay 20-30% extra) and this is evened out over the year.

Answer 3

If you pay monthly, there will be a service charge for doing so with most companies.  Some will waive the service charge in you use a credit card, or allow them to automatically withdraw the amount from your checking account.

If you have bad credit, they will demand the entire fee up front.

Answer 4

Because I had the money to start with I paid annually and then I put money away into a separate account each month for next years.

Normally when you get a quote online, they gave the annual price and also the monthly price - with the total amount payable.

Answer 5

You will pay interest either way, to them monthly or on the credit card eventually.  The interest is so small that most are not concerned about it.  I personally pay mine monthly even though I have all of it to free up some cash.