By Daniel Machin
Motorists in the UK are feeling the cost of opting to pay their car insurance on a monthly basis.
Market research from Consumer Intelligence reveals that drivers are forking out a total £682 million more than advertised price just because they decide not to pay the whole fee up front.
Some 31 per cent of drivers pay their car insurance by monthly direct debit, according to the study, and they typically pay an additional £88 for the privilege of doing so.
"Opting to pay by direct debit enables motorists to spread the payments and can be a good way of budgeting," said Ian Hughes of Consumer Intelligence.
Shopping around for car insurance
"However, drivers need to be aware that there is often a cost attached and that the premium they are initially quoted will not necessarily be the same they end up paying.
"People need to think carefully before opting for direct debit.
"An insurer which charges for direct debit can still be more competitive than one that does not but drivers have to take all factors into account when shopping around."
Most insurers were found to charge a high rate of interest for spreading payments out over the course of a year.
Drivers urged to do their homework
The average interest rate among insurers currently stands at 23 per cent, leading to seriously inflated premiums and tipping the average £922 annual bill over the £1,000 mark.
The lowest rate in the study was 9.9 per cent, while in one case an unscrupulous firm was charging as much as 31.9 per cent.
In light of the findings, Consumer Intelligence recommends drivers do their homework when it comes to car insurance and the cost of monthly payments.
It claims it can often be cheaper for consumers to buy insurance outright with a credit card and then make the repayments at a lower interest rate.