Martin Lewis reveals simple mistake that could be costing you on car insurance (original) (raw)

Money saving expert Martin Lewis has warned motorists that they could be out of pocket by hundreds of pounds by making a simple mistake. He highlighted the potential pitfalls of paying for car insurance on a monthly basis compared to an annual rate.

In a post on social media platform X, he explained that those who opt to spread their payments over 12 months are essentially taking out a loan and can face hefty charges as a result, often exceeding those of typical credit cards.

He wrote: "Warning: monthly direct debit is a loan - they pay the year for you and loan you the money often at 20 - 40% APR way more than a credit card. I'm shocked by how many pay by monthly direct debit. Avoid if at all possible, more help in I should say, way more than a typical high street credit card." For money-saving tips, sign up to our Money newsletter here.

Martin Lewis

Money saving expert Martin Lewis (Image: ITV)

He directed his followers to the Money Saving Expert website, which offers advice on car loans, including the importance of avoiding auto-renewal, along with the optimal time to obtain car insurance quotes (20 to 27 days before the policy start date), the impact of being on the electoral roll on costs, and the fact that the cheapest policies typically require annual payment.

One follower responded that the difference for them was minimal, stating: "It's only about £15 difference over the course of the year so I prefer that than a relatively bigger chunk disappearing in one go. " Mr Lewis responded: "You must be on a low apr and low premium - for many its £100s."

Mr Lewis says the ideal time to renew is exactly 23 days before the policy expires, which applies to comparing quotes from different providers, not just renewal quotes. Insurance companies determine their renewal prices based on 'actuarial risk', which means that delaying renewal can result in higher premiums, reports the Express. Join our WhatsApp news community here for the latest breaking news.

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