You may be aware that you can usually pay either monthly for your car insurance or make an annual single premium. In the current economic climate a lot of people possibly prefer to pay monthly thus spreading the cost over up to a 12 month period.
However, if you were in a financial position to pay a single premium once a year then you may find that you can save yourself some money. Why is this?
Well, if you pay monthly, this means that you are borrowing the money from the insurer to pay for your cover as a result of which the insurance company often charges you interest on the amount you borrow. So, not only are you having to pay the annual cost of the cover but you may also be having to pay interest charges each month with the interest being included in the monthly amount you pay the car insurance provider that you usually pay by direct debit.
If you were to pay annually for your cover and for whatever reason you had to cancel the cover part way through the period of your insurance then you would hopefully received a refund less some sort of penalty.
If you were to sell the car that was insured that you had paid an annual single premium for and purchased another car then you should be able to transfer the cover to the replacement car subject to a change in the cost of your cover.
So, as you can see, even when paying an annual single premium, there is some flexibility.
If you are in the fortunate position financially to be able to pay the total cost of insuring your car as one single premium up front then it is certainly something that you may wish to consider thus avoiding the interest being charged by many insurers to policyholders who pay for their cover on a monthly basis.
