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[Del Boy]

that is just stupid amount of money..

God knows how they expect someone of 17 to afford it I honestly don't know. Still he's 18 in a few weeks so it should *touch wood* go down slightly.

[Andy B]

.....

God knows how they expect someone of 17 to afford it I honestly don't know. [/quote] They don't actually want them to.

.....

Still he's 18 in a few weeks so it should *touch wood* go down slightly.
[/quote] Can't see it making much difference  I'm 50 & still waiting for it to go down! 

[davethediver]

It's wrong that they charge interest on insurance that is paid for monthly, but most people seem to accept it without question. Why should you pay for it in one go (or pay interest if in instalments) when the product/service you buy isn't received in one go?

Of course it is. If you have an accident within days of cover starting, insurance company pays for repair costs or otherwise in full (excepting excesses). They don`t pay costs on the basis that you have over 11 months left on your policy so "we`ll take 11 months to pay for repairs"

No it's not

PEOPLE JUST HAVE A HABIT ON HERE OF SAYING THE EXACT OPPOSITE OF WHAT ANYONE ELSE SAYS

But if you need to 'borrow the money' for the purchase why should it be interest free???

[Vamps]

To get Master Vamps, my stepson - his loaded Dad does nothing on the road after he passed his test we took out an Admiral multi car, cost swmbo and me a bit more but overall we saved around £700 so worth it for a couple of years. 19 now and come September will be on his own as Admiral will come to and end and I will be able to shop around for swmbo and myself, you have to do what you have to do to help them on their way.....

[geoffr70]

It's wrong that they charge interest on insurance that is paid for monthly, but most people seem to accept it without question. Why should you pay for it in one go (or pay interest if in instalments) when the product/service you buy isn't received in one go?

Of course it is. If you have an accident within days of cover starting, insurance company pays for repair costs or otherwise in full (excepting excesses). They don`t pay costs on the basis that you have over 11 months left on your policy so "we`ll take 11 months to pay for repairs"

No it's not

PEOPLE JUST HAVE A HABIT ON HERE OF SAYING THE EXACT OPPOSITE OF WHAT ANYONE ELSE SAYS

But if you need to 'borrow the money' for the purchase why should it be interest free???

Obviously you've just missed the entire point.

[RobG]

It's wrong that they charge interest on insurance that is paid for monthly, but most people seem to accept it without question. Why should you pay for it in one go (or pay interest if in instalments) when the product/service you buy isn't received in one go?

Of course it is. If you have an accident within days of cover starting, insurance company pays for repair costs or otherwise in full (excepting excesses). They don`t pay costs on the basis that you have over 11 months left on your policy so "we`ll take 11 months to pay for repairs"

No it's not

PEOPLE JUST HAVE A HABIT ON HERE OF SAYING THE EXACT OPPOSITE OF WHAT ANYONE ELSE SAYS

But if you need to 'borrow the money' for the purchase why should it be interest free???

Obviously you've just missed the entire point.

Elaborate

[Kevin Wood]

Whichever way you look at it, there's a cost associated in paying for anything monthly as opposed to annually in advance.

Insurance companies work by investing your premium in the hope that incoming premiums plus income from invested capital exceeds payouts, allowing them to make a profit.

If your premium is being drip-fed monthly rather than in one lump sum at the start of the term the amount invested over the term will yield much lower returns so why wouldn't they charge you more?

[twiglet]

.....

God knows how they expect someone of 17 to afford it I honestly don't know.

They don't actually want them to.

.....

Still he's 18 in a few weeks so it should *touch wood* go down slightly.
[/quote] Can't see it making much difference  I'm 50 & still waiting for it to go down! 
[/quote]

Think yourself lucky Andy!  Alot of fellas your age can't get it up in the first place!! 

[Andy B]

.....so why wouldn't they charge you more?

No problem with paying a reasonable percentage interest to pay over the year, but to ask someone to pay two thirds as much again for the priviledge of doing so is takng the proverbial 

[Andy B]

.....
Think yourself lucky Andy!  Alot of fellas your age can't get it up in the first place!! 

 

[Kevin Wood]

.....so why wouldn't they charge you more?

No problem with paying a reasonable percentage interest to pay over the year, but to ask someone to pay two thirds as much again for the priviledge of doing so is takng the proverbial

Agreed. Something insurance companies are well practised at. The only solution is to take your business elsewhere.

[geoffr70]

Car insurance is a product received over a space of time, usually 12 months. It follows that it is reasonable to pay for it over the service period, which in this case conveniently happens to be 12 monthly payments. There is no justifiable reason why interest is charged, other than the apathy of the average person, who conveniently for the insurance provider can't or doesn't want to pay in a oner.

Council tax is due in full at the start of the year. The local 'authority' (let's call them that for convenience), let people pay in 10 (usually) monthly instalments. Why? The 'services' provided by the council are received (apparently) over the course of a year. You'd all be up in arms if interest was charged on paying council tax by instalments, yet blindly accept it for car insurance and the like.

I brought this up a few months back, someone mentioned that insurance companies make less money if monthly payments are made, as the insurance company has less money upfront to invest and make a return on, which they said was the reason interest is charged on monthly payments. This is irrelevant, whatever they do with the money. Equally, I wouldn't ask my employer to pay interest as I receive my salary in 12 portions, because I could've save some mobey on my mortgage etc by paying off a lump at the start of the year.

That's what I think, and that's what I'm sticking to. It's just another way that companies who abuse capitalism get more money out of us consumers. If you can't see it, I can.

No doubt I'll have the usual crowd trying to beat their different opinions into me and telling me how wrong I am.

[Kevin Wood]

That's what I think, and that's what I'm sticking to. It's just another way that companies who abuse capitalism get more money out of us consumers. If you can't see it, I can.

Like it or not, insurance companies "abuse capitalism" in order to build big enough coffers to cover the worst case scenario on our behalf. We aren't able to stomach such a (potentially multi-million pound) claim ourselves, so we have to accept it.

[jonathanh]

Ok. To add to the debate. 

Monthly premiums do in theory cost more than annual up front.  Two reasons

1. Claims are spread over the poicy year on average but up front premiums give the insueres some investment time.

2. Admin:  one payment is simpler than 12 particularly when for the 12 payments they need to monitor they have been paid and if not cancel the policy

Both of thrse points are minor. Insurers invest in short dated gilts which give virtually no interest at all so point 1 is tiny.  Point 2 is automated so again does not cost hardly anything.

The real reason why they charge so much more for monthly is that they can get away with it, pure profit margin.  They get you sucked in by a cheap quote but few can afford the one lump sum payment but by that stage you are thinking they are cheap and fall into the trap of taking the monthly option because you think the company offering the lowest annual premium is lowest on monthly.