When you first arranged your classic car insurance policy how did you agree to pay for the premiums? The answer is probably that you preferred to pay by direct debit on a monthly basis but paid the first month or two’s premiums by debit card and then the insurer took future premiums by direct debit.
Well, did you realise that, in choosing the monthly option your insurance company is probably charging you interest and that has been added to the total premium for the year and spread over the monthly premiums. The reason for this is quite simply that you are borrowing the monies to pay for your classic car insurance from the insurer.
In the current financial climate, many people in the UK have been struggling to meet all their household expenditure and can ill afford to have a few hundred pounds coming out of their bank account all at once. This may be the main reason why people pay for things like insurance on a monthly basis.
However, there will no doubt be some people that did not appreciate that they could have paid for their classic car insurance with an annual payment and saved themselves a few pounds in interest. If you pay annually, when setting up the policy, the insurance company will take the first year’s annual premium out of your bank account by debit card or you could pay by credit card. Thereafter, you may be given the option to pay by direct debit or you could still pay using one of your cards.
As with many things in life, the choice is yours. If you can comfortably afford to pay the annual premium all in one go you could save yourself some money but equally, there is no point in putting yourself under financial pressure, in which case paying monthly may be the preferred option.
How do you pay for yours – let us know?