Car Insurance..better To Pay 1 Payment In Full Or Spread It Over Year ?

[beezaneez]

i am buying car insurance, i can afford to pay it in full and i would rather do it lkike this instead of monthly instanllments just to get done with it plus it will work out cheaper. but just say , god forbid, anything happened and i needed to cancel insurance , could i get refunded ? if i sold car say 2 months into the year could i reclaimn the other 10 months back ?

what would you do ? if i pay full i pay £837.00 if i pay over the year in installments i pay a total of £980.00 a big difference !!

what are the benefits of both ?

thankyou

[roslyn251254]

Paying the whole lot up front must work out cheaper for your large amount. If you cancel insurance you won't get the full months left, only a % of it. Depends how long you want to have a car thugh - any car that is.

[hc4361]

It would make no difference if you need to cancel the policy. When you pay monthly you have in fact purchased an annual insurance policy on credit and you be subject to the same cancellation/admin fees as if you'd paid the 12 months in full upfront.

[beezaneez]

thnxx but if i cancel obviously i will not get the full year, what i want to know is if i pay up front, cancel 2 months into policy , will they refund me back 10 months ? what are the pro,s and cons , that is the question.

thanx

[Mass_Hysteria]

If you paid in full and had to cancel after 2,3,4 months you would get the balance returned, probably less an admin fee.

If you are able to pay in full I would, it's cheaper.

[EDDIE51]

People often believe that if you pay for insurance monthly then you are just buying 1 months worth at a time, this is not the case. If you pay monthly insurance then all that happens is the finance company pay the years premium and then make a profit by getting it back with interest over the year.
Each company has its own rules about cancellations but expect to pay a fee for cancellation or change to the policy.

[hc4361]

If you pay monthly and cancel after two months they will hit you with a hefty bill. If you pay in full and cancel after two months you will be refunded minus the hefty bill.
So, insurance is £1000 in full; £1200 monthly (100 per month).

After two months you cancel. If you paid in full you will be refunded £840 - the cancellation fee which can be as much as £300, so £540.
If you paid monthly you will have to pay the cancellation fee of £300.

This is just a guide to how it works - you would need to read the small print to get a proper figure for the cancellation fee.

I'm just trying to point out that it makes no difference, except you pay interest on the total amount payable if you pay monthly.

[hc4361]

Thanks, Eddie - you explained it much better than me.

[beezaneez]

hmmm complicating, i will call insurance companie tomorrow. do you think sites such as gocompare etc are cheaper or is it better for me to go and deal direct with say axa / admiral etc ?

thanks again guys

[roslyn251254]

Definitely use the comparison websites. My renewal came today - Hastings Direct wanted £211 - I found identical cover with thePost Office for £141!

[hc4361]

You need to check with GoCompare, Confused.com and ComparetheMarket.

Then you need to look at DirectLine as they don't use comparison sites.

Excellent information here:
http://www.moneysavingexpert.com/car-insurance/

Check how much it will cost to cancel the policy if that is a concern of yours before you purchase.

[EDDIE51]

The comparison sites are fine but it is worth phoning the company directly and asking if they can beat the comparison site quote if you cut out the middleman and buy direct from them. Remember the comparison site gets commision on every policy it sells so try to deal direct and get some of that as a discount.