Everyone’s looking for ways to save money in the current economy, and van owners are no different. But can you actually save cash in the long run if you pay monthly van insurance?
Personal car insurance and commercial van insurance companies have been hiking their premiums at many times over the current rate of inflation for several years now, and it can be an expensive endeavour indeed to pay for a year’s worth of cover all in one go. Many Brits feel that there has to be a better way, and flirt with the idea of entering into a monthly payment plan as a way of spreading the financial burden over the course of an entire year, but how useful a tactic is this in the long run?
PAYING FOR THE PRIVILEGE
The unfortunate reality is that while you should be able to pay your premium over the course of 12 months, most of the time this is actually more expensive when it’s all said and done than it would be to pay it all at once. This is because all too many insurers will charge you a monthly fee for the privilege of stretching the hurt over the course of a year – and these fees can add up!
Many insurers will charge you as much as 11 per cent in ‘administrative fees’ every month in addition to your monthly instalment as a way to both maximise their profits and to discourage customers from paying monthly. This means that you will actually end up paying a significant amount more than you would have if you simply paid up-front as usual.
There are some insurers that don’t charge nearly as much for the ability to make monthly instalments on your annual premium, with rates of around 5.5 per cent at the minimum. However, you could be hunting for quite some time until you find an insurer willing to offer you the lower administrative fees, and even when you do find one they may not offer you the same quote with the same level of cover, which means that it could quite often be a wild goose chase to find what you’re looking for.
A LITTLE FINANCIAL GYMNASTICS CAN GO A LONG WAY
However, there are ways around this if you don’t mind a little bit of wheeling and dealing. One of the best ways to avoid having to pay an additional 11 per cent on top of your already much too high premium price and yet still give yourself some breathing room to pay in monthly instalments is to make use of a 0 per cent interest credit card.
Many credit card deals offer an 0 per cent interest rate introductory period, usually for a full year or sometimes the first 18 months. This means that you can use such a card to pay for your insurance premium up front, and then use the 0 interest rate period on the card to make monthly repayments, thus avoiding the need to pay your insurer even a penny more than you have to.
Of course, there are some flaws with this plan, as you need to be able to qualify for a new credit card in order to make use of it, and the current economic landscape has ravaged the credit ratings of many an individual. Not only that, but if you neglect to repay the balance in full before the end of the 0 per cent introductory interest rate, you’re going to have to begin paying interest on however much is left on the credit card – and with the interest rates on consumer credit being so high, you could end up still paying more than you need to if you’re not careful!
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Image: take a bite by Darwin Bell