Motorists 'caught in direct debit trap'
Oct 24, 2006
While around half a million new '56' number plate cars were sold last month, motorists could be paying over the odds for their insurance if they choose to pay by direct debit, new research shows.
A study by financial comparison service Money Expert found that drivers who spread out the cost of their insurance by paying by direct debit could be paying as much as 37 per cent more than those who pay in a lump sum. Only 14 per cent of the 185 fully comprehensive motor insurance policies on the market don't charge extra for paying by direct debit, with those that do charging an average of 21.5 per cent APR, although charges rise as high as 37.12 per cent.
This would mean that someone who wanted to spread out a fully comprehensive premium of £762 could be paying as much as £1,044 after spreading payments.
The company advised motorists to think about paying for their insurance in a lump sum or using a low-interest credit card. With personal and secured low-interest loans a popular way to fund a new car purchase, some drivers may also choose to pay for a lump insurance payment with a loan.
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