In these increasingly challenging financial times it makes total sense for any business – regardless of the sector in which it operates – to come up with innovative ways of helping its customers pay for various goods and services.
It’s no different in the world of car insurance with many providers now offering them the chance to pay their premiums in monthly instalments rather than paying for it all up front as this enables them to spread the cost over the life of the policy. In some cases this can enable drivers to afford higher levels of cover as the costs can be squeezed into their monthly budgets. This, of course, is attractive to the insurance companies themselves because they get to earn more money out of their clients.
Unfortunately, the downside to this has been that many drivers face the prospect of having to pay a deposit for the privilege of this service. In some cases this can be anything up to 20 per cent of the overall cost of the annual premium.
A changing market
However, there is good news. The increasing use of changing your policy using a price-comparison websites and fierce competition between rival providers means that insurers have been starting to offer what is known as no-deposit car insurance to their customers. So how does this work? Well in exactly the same way as before. Customers can still enjoy the benefit of paying on a monthly basis and don’t have to pay out a hefty deposit up front which can be particularly useful for those who need to comply with strict monthly budgets.
Also, taking out this type of policy shouldn’t automatically mean that the overall premium you pay will increase because many insurers still keep monthly repayments at their standard interest rate, and this is usually around the 20 per cent mark.
Finding the best deals
As always the same rule applies: shop around for the best deals. There is no shortage of insurance companies all battling for a slice of the market so compare their deals thoroughly and be ruthless in your dealings. You may well be able to strike a great deal. Ask friends and family members. The chances are that at least some of them will have explored ways of acquiring insurance in this way and they may be able to offer you a valuable insight into what companies are worth talking to – and which should be avoided.
It’s also worth double checking the terms of the agreement. In some cases, for example, it can work out cheaper to pay the entire premium up front so clarify how much each route would cost and then see how much you can afford to pay out in one go. Make sure there are no hidden surprises such as fees to pay which were not made clear at the outset. Take your time, consider all the documentation and ask questions if you don’t understand. Insurance is not always straightforward so caution pays.
Other ways to cut the cost
The chances are that if you are looking to spread your payments out over a longer period then you haven’t got money to burn and would be interested in looking at other ways to reduce the overall costs involved. So what should you consider? Firstly you can limit your annual mileage allowance by only agreeing to travel a certain amount over the coming year. You may also be able to trim back the costs by declining extras such as the use of a courtesy cars should you have a crash. Third party insurance may also reduce your premium if you are willing to cover the cost of your own vehicle should you be involved in a motor accident.
Finally, making your vehicle as secure as possible makes sense. Find out what manufacturers your insurance company approves and then consider buying tracking devices, wheel locks or immobilisers. Anything, in fact, that might deter potential thieves.
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