Buying a new car is for most of us one of the biggest financial decisions we make outside of buying a house.
And the evidence is that it’s one we don’t take lightly. The majority of us take the time to make sure we get the car we want at the best price possible.
We visit more than one garage, take more than one test drive and search the internet and magazines such as Auto Trader so that we can make an informed choice.
This is not always the case however when we come to insure our new pride and joy…
Nice car shame about the insurance premiums
On the whole, car insurance premiums are on the rise and they are continuing to race ahead. Factors such as engine size, your job, age and where you live can also increase your premiums even more.
But before you despair that your new motor will cost too much to insure there are things you can do make sure you get the best deal.
Make an effort: Some insurers will play on your apathy and increase your premiums in the hope that you cannot be bothered to shop around and look for a better deal.
As a general rule you should always get at least three quotes. MoneyExpert.com searches the market and can help you find the best quotes in a couple of easy steps.
Buy online: Buying online is often the smartest move as many car insurers offer a discount of five per cent or more if you purchase your car insurance through a website
Specialist insurers: Some insurers are geared towards offering certain motorists a better deal than average. For example, some focus primarily on safe drivers or women and because of this claim to offer them a very competitive and hard to beat deal
Go for a higher excess: You can also cut your premium by opting for a higher excess – the amount you have to pay before the insurer takes up the bill.
Always check your blind spot and look out for direct debits
One of the best ways to ensure you get the best deal is to try and avoid paying by direct debit.
Although setting up a direct debit can be a good way of spreading your car insurance payments they usually come with a charge which can wipe out any savings that you have earned through researching the market to find the best deal
Almost half a million new cars sporting the much sought-after ’56 number plate were sold in October last year, but many drivers hoping to get a bargain on the forecourts may have ended up paying as much as 37 per cent over the odds for their insurance if they chose to pay by direct debit.
The average fully comprehensive premium of around £762 could rise to as much as £1,044 if you choose to spread your payments.
Providers that charge for the privilege of the direct debit payment option offer APRs that vary from as little as 2.5 per cent to as high as 37.12 per cent – that’s a difference of around £264 a year on the average premium.
And younger drivers or those with flashier tastes and consequently higher premiums will be hit even harder. For example, on a premium of £1,000 the average extra charge for direct debit is around £215, but this could be as high as £371 per year.
The direct debit trap is always a nasty surprise and is usually discreetly hidden until the last possible moment by insurers.
Customers need to be clear about all the charges they are facing and should ask for details of any financial agreement they are offered. Direct Debit from most insurers comes at a price.
You should put serious thought into paying for car insurance in a lump sum, but a good alternative is to use a low-interest credit card.
You can pay this off at a lower rate than the one on offer at your insurer and you may not have to pay interest at all if you take out a new card which offers 0% on new purchases.
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