UK drivers face ‘premium’ cost as much as | Tech News
Some motorists are persevering with to pay exorbitant rates of interest when spreading the cost of their car insurance coverage, in keeping with evaluation by Which? The client group revealed that some insurers had been levying annual proportion charges (APRs) on a par with pricey credit playing cards.
Certain corporations are nonetheless charging APRs of close to 30% on month-to-month motor insurance coverage funds, Which? warned. The client group discovered that between February and March 2026, a number of corporations had been charging APRs above 25%, with some reaching as high as 29.9%.
Which? famous that paying month-to-month is incessantly the one viable option for households underneath financial pressure, creating a so-called “poverty premium”. Two years in the past, some insurers had been imposing charges exceeding 35% APR, in keeping with Which?
While some suppliers have decreased their charges since then, Which? believes progress has been too gradual. Between February and March, Which? tried to contact 61 car insurance coverage manufacturers, enquiring in regards to the consultant APRs charged to clients paying month-to-month. Some 48 responded with their charges, or confirmed they didn’t charge additional for paying in instalments.
Rocio Concha, director of coverage and advocacy at Which? mentioned: “Millions of motorists rely on monthly payments to afford essential car insurance cover, yet many are still being charged interest rates comparable to an expensive credit card.”
A spokesperson for the Association of British Insurers (ABI) mentioned: “The industry recognises that many households are under financial pressure and it understands why spreading the cost of cover is essential for many motorists. Premium finance is widely used across the market with charges that can differ between insurers and by product.
“Our members stay dedicated to enhancing outcomes and this consists of being open about the truth that offering this service includes real operational prices – together with holding cowl in place for a period even when funds are delayed or missed.
“Our premium finance principles make clear that any charges must be fair, transparent, and reflective of the costs incurred by insurers. The FCA’s (Financial Conduct Authority’s) own market study found that premium finance can deliver fair value for consumers and that the overall cost of premium finance has fallen since 2022.”
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