Martin Lewis urges drivers to beware of easy car insurance mistake – here are the key details --[Reported by Umva mag]

MARTIN Lewis has urged car drivers to beware of a simple car insurance payment mistake that can end up being more expensive. The money guru has returned with a new video to help motorists save some extra bits of cash while paying for car insurance. Martin Lewis has warned drivers against paying for car insurance monthly The expert gave other alternatives for drivers to save money Martin has warned drivers to stay clear of paying the car insurance in monthly direct debits as it can effectively cost a lot more than paying the amount annually. In a clip posted on TikTok, the expert said paying monthly is in reality taking a loan with huge interest rates. He said: “It’s really a loan & the interest can be more than 40 per cent – worse than many high street credit cards. “If you choose to pay through monthly direct debits, the car insurance company gets a finance firm to pay for you annually. “So the finance firm is effectively lending you the money over heavy interest rates – and you end up paying back in 12 instalments.” This is because when you pay monthly, the insurer classes it as you taking out a loan and charges you interest, meaning you pay more. When you pay up front there’s no interest on top. Martin said: “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 typical credit card. “I’m shocked by how many pay by monthly DD. Avoid if at all possible.” Martin went on to say while he understood paying for car insurance monthly can help drivers budget, the APRs charged by many big insurers mean a cheaper option can be paying annually with a credit card, ideally charging 0%. And even some credit cards without interest-free periods charge lower rates than insurers. APR refers to the total cost of your borrowing for the year. Martin added: “If you have to, most would be far better to put it on a 0% card and repay it over the 12 months. “Or even a standard high st card with APR 20%, undercuts many big insurers who charge up to 40% APR.” The latest MSE newsletter revealed how Direct Line charges 23% APR, Aviva 16%, Esure 26% and Hedgehog 44%. How to save the cost? Martin urged motorists to pay their car insurance in full every year as it is the most cost-effective method. “If you are lucky enough to save some cash, it’s best to pay upfront,” he added. However, he noted how this could not be feasible for many drivers – and provided alternative solutions. The expert advised drivers to get a 0 per cent interest rate credit card that lets them spend for a set period of time without being charged interest, after which point you are. However, you still have to make monthly repayments and if you miss them can see your 0% interest deal removed. But they can be a good option if you need to cover an upfront cost, like an annual payment for car insurance. In this case, you would pay for your car insurance upfront using the credit card, then pay off the balance each month. This of course means you would have to work out how much you need to pay off each month so you are not left with any outstanding balance after the 0% interest period ends. As an example, if your car insurance policy costs £480 for the year and your 0% period lasts 12 months, you would need to pay off £40 on the credit card each month. You may also be able to pay a minimum payment each month, which makes your repayments more manageable. However, you may breach the 0% interest period and have to pay interest on any outstanding balance which will cost you more overall. Meanwhile, if you’re using a normal credit card to pay for your car insurance up front, paying just the minimum amount each month may be more expensive than paying your insurer monthly if it means you are paying off the loan, and the interest on that loan, over a longer time. Of course, always bear in mind that a credit card is still borrowing and if you are using one to pay for your car insurance, try limiting it to just that and don’t use it on other spending as your repayment costs could rack up. If you do miss monthly repayments, you can be hit with late payment fees with the typical charge of around £12. Meanwhile, not everyone will be eligible for a 0% credit card and you may be refused one if your credit rating is poor. You can check out the best credit card deals by going on price comparison sites like MSE, MoneySuperMarket and Compare the Market. What is car insurance? Consumer reporter Sam Walker talks you through what car insurance is and what it covers you for… Car insurance pays out if your vehicle is stolen, damaged, catches on fire or is involved in an accident. As a minimum, it protects you against any damage you case to oth

MARTIN Lewis has urged car drivers to beware of a simple car insurance payment mistake that can end up being more expensive.

The money guru has returned with a new video to help motorists save some extra bits of cash while paying for car insurance.

Martin has warned drivers to stay clear of paying the car insurance in monthly direct debits as it can effectively cost a lot more than paying the amount annually.

In a clip posted on TikTok, the expert said paying monthly is in reality taking a loan with huge interest rates.

He said: “It’s really a loan & the interest can be more than 40 per cent – worse than many high street credit cards.

“If you choose to pay through monthly direct debits, the car insurance company gets a finance firm to pay for you annually.

“So the finance firm is effectively lending you the money over heavy interest rates – and you end up paying back in 12 instalments.”

This is because when you pay monthly, the insurer classes it as you taking out a loan and charges you interest, meaning you pay more.

When you pay up front there’s no interest on top.

Martin said: “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 typical credit card.

“I’m shocked by how many pay by monthly DD. Avoid if at all possible.”

Martin went on to say while he understood paying for car insurance monthly can help drivers budget, the APRs charged by many big insurers mean a cheaper option can be paying annually with a credit card, ideally charging 0%.

And even some credit cards without interest-free periods charge lower rates than insurers.

APR refers to the total cost of your borrowing for the year.

Martin added: “If you have to, most would be far better to put it on a 0% card and repay it over the 12 months.

“Or even a standard high st card with APR 20%, undercuts many big insurers who charge up to 40% APR.”

The latest MSE newsletter revealed how Direct Line charges 23% APR, Aviva 16%, Esure 26% and Hedgehog 44%.

How to save the cost?

Martin urged motorists to pay their car insurance in full every year as it is the most cost-effective method.

“If you are lucky enough to save some cash, it’s best to pay upfront,” he added.

However, he noted how this could not be feasible for many drivers – and provided alternative solutions.

The expert advised drivers to get a 0 per cent interest rate credit card that lets them spend for a set period of time without being charged interest, after which point you are.

However, you still have to make monthly repayments and if you miss them can see your 0% interest deal removed.

But they can be a good option if you need to cover an upfront cost, like an annual payment for car insurance.

In this case, you would pay for your car insurance upfront using the credit card, then pay off the balance each month.

This of course means you would have to work out how much you need to pay off each month so you are not left with any outstanding balance after the 0% interest period ends.

As an example, if your car insurance policy costs £480 for the year and your 0% period lasts 12 months, you would need to pay off £40 on the credit card each month.

You may also be able to pay a minimum payment each month, which makes your repayments more manageable.

However, you may breach the 0% interest period and have to pay interest on any outstanding balance which will cost you more overall.

Meanwhile, if you’re using a normal credit card to pay for your car insurance up front, paying just the minimum amount each month may be more expensive than paying your insurer monthly if it means you are paying off the loan, and the interest on that loan, over a longer time.

Of course, always bear in mind that a credit card is still borrowing and if you are using one to pay for your car insurance, try limiting it to just that and don’t use it on other spending as your repayment costs could rack up.

If you do miss monthly repayments, you can be hit with late payment fees with the typical charge of around £12.

Meanwhile, not everyone will be eligible for a 0% credit card and you may be refused one if your credit rating is poor.

You can check out the best credit card deals by going on price comparison sites like MSE, MoneySuperMarket and Compare the Market.

What is car insurance?

Consumer reporter Sam Walker talks you through what car insurance is and what it covers you for…

Car insurance pays out if your vehicle is stolen, damaged, catches on fire or is involved in an accident.

As a minimum, it protects you against any damage you case to other road users, the public or their property – these are called third parties.

You only need to claim on your car insurance when an accident is your fault.

If another motorist is to blame, their insurance should pay out instead.

Car insurance, unlike home insurance, is a legal requirement and if you don’t have it you can be fined up to £1,000.

You can also have your vehicle seized and destroyed.

However, you don’t need to insure your car if it is classed as “off-road”, or holds a statutory off road notification (SORN).

The vehicle has to be kept on private land and not a public highway though.

The following news has been carefully analyzed, curated, and compiled by Umva Mag from a diverse range of people, sources, and reputable platforms. Our editorial team strives to ensure the accuracy and reliability of the information we provide. By combining insights from multiple perspectives, we aim to offer a well-rounded and comprehensive understanding of the events and stories that shape our world. Umva Mag values transparency, accountability, and journalistic integrity, ensuring that each piece of content is delivered with the utmost professionalism.

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