How to buy monthly car insurance - our analysis

A large proportion of Uk motorists find paying out for car insurance every year a real financial burden, and many of them decide to pay monthly. A lot of websites accept monthly payments (or, at least, most motorists think they do; the money is often provided by finance companies); but, almost invariably, they charge extra for it. Is it a rip-off? Or are the charges fair? We decided to find out.

First of all we commissioned a group of people to get quotes for renewing their car insurance from some of the popular price comparison sites. We extracted the main figures that we were looking for (best quotes for paying yearly, and then paying monthly) and tabulated them; you can see the results here.

This showed us that not only were there wide variations in the finance charges from one motorist to another, but also that there was no consistency in the results obtained from particular price comparison sites. This suggested that either different insurers had different rates; or they varied from one applicant to another, depending upon each person's profile. So, we persuaded five people to get four sets of quotes each from the same four popular price comparison sites, and we compared the results, which you can see at stage 2. They were very interesting indeed.

Why do finance charges vary so much?

Whilst stressing that the data sample was very small, our results indicated that the extras that are charged for paying monthly depend upon the credit rating of individual applicants. It follows, therefore, that at least some, if not all, of the insurance companies are carrying out credit checks during the application process. Can they do this, legally? Yes indeed, since before getting a quote the applicant has to agree to the price comparison site's terms and conditions, which in all cases specifically allows this. I wonder how many people actually read these T&Cs??

Which insurers are the cheapest?

We didn't find any insurer that consistently offered better rates. However, we noted that some insurers seemed to positively discourage applications from people paying monthly. These insurers not only avoided giving any figures in the search results for monthly payments, but they actually quoted substantially more for yearly payments when our researches selected the 'Do you usually pay monthly' (or similar) button during the application process. These companies were Admiral, Bell, Elephant, and Diamond.

Which price comparison site was the cheapest?

None of them. The cheapest quotes varied from one site to the next, which suggests that, in order to search for the cheapest available quote, you really need to compare prices at several price comparison sites; that's not a great problem since, for most people, each form only takes about five minutes or so to fill in. You can find a list of the more popular sites on our price comparison page.

Click here for our facts and figures page