DRIVERS spend almost lb800 a year insuring their cars, according to Confused.com.
But what if you could chop almost lb200 off that bill with only one easy trick?
On average you could save lb190 annually on your auto insurance by simply switching to paying yearly rather than monthly – but some drivers could cut their bills by as much as lb440, according to calculations by The Sun.
Car insurance providers often charge high rates of interest and upfront costs to drivers who pay their car insurance in monthly payments.
That's because you're essentially taking out a loan from the car insurer to pay back your cover in bite-sized payments.
While customers who are able to afford to pay their car insurance yearly avoid these extra costs.
Car insurance companies can then ask you for interest on this loan with rates as high as 40 per cent.
As along with this insurers will often make you pay an upfront fee close to 20 per cent of your yearly costs – then remainder of your instalments is going to be disseminate over 10 or 11 months.
Across the eight insurers that we looked at we found that typically drivers can help to save lb189 if you are paying annually rather in monthly obligations.
And all you need to do in order to create a saving is change to annual payments the next time re-new your car insurance.
We got a quote from each insurer for a young driver with a 2006 Toyota Yaris.
Endsleigh insurance charged lb2,570 to have an annual payment, however the same insurance in monthly payments would set you back lb3,009.
That is really a difference lb438 for the similar policy from the same insurer.
AXA customers making monthly payments have to pay 36 percent interest on their payments, which means that customers who don't pay annually have to spend lb156 more than customers who pay a lump sum payment each year.
If you choose annual payments you're more than likely to obtain a cheaper deal on your auto insurance payments.
But this option is not available to everyone, as some people can't make a large one-time payment.
One choice is to take out credit cards having a lower interest rate than the monthly auto insurance payment rates to purchase your car insurance in a single lump sum payment.
You can then use that charge card to spread the payment over the year.
If you will do this make sure that your insurer allows you to pay by credit card.
A spokesperson from Endsleigh Insurance Services, said: “The cost for everyone customers who pay monthly is higher, because they are effectively getting financing to cover their premium. APR isn't necessarily an indicator of methods a lot more a customer would pay when they opted to buy annually, and we'd suggest customers measure the overall cost of their cover to check value against other quotes.”
A spokesperson from AXA said: “As is typical with lots of car insurers, we allow drivers to cover their cover on a monthly basis or in a lump sum. The annual percentage rate and the difference between paying monthly and annually is made clear towards the customer in the reason for purchase.”
A spokesperson in the Association of British Insurers said: “Paying by instalments helps customers spread their insurance costs simply by entering a credit agreement. Insurers follow the same strict rules as all firms offering other forms of lending. Customers should always get all relevant details, such as the price of their monthly instalments and the total they'll eventually pay. It is usually a good idea to look around to get the offer that best meets your needs.”
Young motorists often wind up spending more on their insurance than on the actual car itself, listed here are the cheapest cars to insure for young drivers.
These are the insurers taking a long to solve an insurance claim.
BMW are recalling 312,000 cars following a BBC watchdog found that they may have a fault which could result in vehicle to cut out while driving.
We pay for your stories! Do you have a story for that Sun Online Money team? Email us at firstname.lastname@example.org or call 0207 78 24516. Don't forget to join the Sun Money's Facebook group for that latest bargains and money-saving advice.