Extra cost of monthly car insurance is 23.8 per cent

Motorists who pay for their car insurance monthly rather than in one lump sum are being charged an interest rate of 23.8 per cent, according to a finance website.

Only Finance states that approximately 13 million motorists in the UK pay for their car insurance in monthly instalments and are missing out on cheaper car insurance by not paying the whole cost up front.

The website states that the average car insurance premium currently costs £459.44, but for instalment payers this totals £506.76, meaning they are being charged interest at a rate of 23.8 per cent.

Most people struggle to pay the lump sum in one go because of the dent this makes in their finances, but alongside the fact that the current best personal loan is set at 6.9 per cent, according to the website, then it may pay to stump up the up front fee to save money.

Other ways in which a motorist could reduce the cost of their annual car insurance is to shop around for a cheaper car insurance quote, according to the Association of British Insurers.

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