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Monthly vs. annual car insurance

Monthly vs. annual car insurance

If you’re looking to save on your car insurance, then you’re probably wondering whether it’s best to pay your insurance monthly or annually. We’ve got the facts… 

Daniel Hutson
From the Motor team
3
minute read
posted 29 OCTOBER 2019

Paying your car insurance annually

Paying your car insurance premium in one go, on an annual basis, is the cheapest way to do it. This is because you won’t have to worry about any interest being added to the amount. Unfortunately, not everyone is in a financial position to be able to do this. Especially considering that the average cost of car insurance is £707, according to our Premium Drivers Report, September 2019.

If you can’t afford to pay in one lump sum, then you have the option to pay the amount in monthly instalments.

Paying your car insurance monthly

While paying your car insurance on a monthly basis will be more expensive in the long run, it makes the cost easier to manage in the short term.

If you choose to pay your car insurance monthly, most insurance providers will require you to pay an initial deposit. This deposit is usually 20% of the annual amount. You’ll then pay back the remainder over the next 11 months. The monthly cost of your car insurance will be calculated by dividing the remaining cost by 11, and adding interest onto it. Interest rates will vary according to your insurance provider.

Other ways to help reduce your car insurance premiums

If you, like many other drivers in the UK, can’t afford to pay your premium in one go, there are many other ways to potentially save on your car insurance.

A great option to consider is telematics car insurance. With this type of policy, the better you drive, the bigger your discount could be.

You might also want to think about adjusting your voluntary excess. A higher voluntary excess could mean lower premiums – but just be sure that you can afford to pay both the voluntary and compulsory excess if you’re involved in an accident.

You may also qualify for a discount if you install additional security features in your car. An alarm system is an excellent choice, as is an immobiliser.

The most effective way to see if you can save on your car insurance is to shop around. At Compare the Market, we’ll gather quotes from a wide range of insurance providers in the UK on your behalf – and it will only take us a few minutes. Start a quote today and see if you can save.

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