Normally, I opt to pay my car insurance in full. Last year, however, I chose to pay monthly for fully comprehensive cover on my Volkswagen Fox because I did not have the lump sum available. Before switching to monthly payments, I had been a Direct Line customer for eight years and, having been very satisfied with their level of service, I did not feel inclined to look elsewhere for what perhaps might have been a better insurance option for me. Despite being somebody who is good at budgeting, meeting my monthly car insurance payments became a perpetual source of anxiety.
During the period in which I opted to pay my car insurance monthly, I was completing a postgraduate research degree. Comprised of a small maintenance grant and earnings from a part-time catering job, my income was low but sufficient to meet my outgoings and allow me the odd recreational activity. I have always saved a proportion of my income to cushion against any unexpected mechanic bills and, while I was not living in a state of poverty, it became clear that putting even more of my modest income aside for my next car insurance renewal was out of the question.
On paper, the difference between paying my premium outright or in monthly instalments was approximately £80. As an rexisting customer no deposit was required. Being about the equivalent price of two pints of beer a month, spreading this cost over twelve months did not, at first, seem an unaffordable expense.
However, it was not the difference in cost that caused me difficulty. Having previously been in a position where I could pay my car insurance and essentially put it to the back of my mind until the following year, juggling the monthly direct debit alongside other monthly payments, including my sim-only mobile phone contract, broadband, and household bills, became a tricky task. This was exacerbated at certain points of the year, such as Christmas time and the winter months.
Although the past few years have been a period in which rising car insurance costs were to be expected, choosing to pay for my car insurance monthly put a considerable, and somewhat unnecessary, strain on my finances. I have continued to insure my vehicle with Direct Line, but I hope that I will never again find myself in a position where I must pay for my insurance by monthly instalments. Paying my car insurance in one instalment enables me to get it over with in one go, while I find that it gives me more breathing space to consider alternative insurers when the time comes to renew.