British drivers stand to gain significant financial relief on car insurance costs through a straightforward adjustment to their payment method—opting for annual upfront payments over monthly instalments—with new data showing an average saving of £239, according to research from comparison platform go.compare.
The analysis, which highlights the stark cost difference between payment plans, reveals that motorists who pay for their annual car insurance upfront face a typical cost of £418. In contrast, those choosing monthly instalments accrue a total bill of £657 over 12 months—representing a 57% increase in overall expenditure.
This disparity stems from additional interest charges and administrative fees tied to monthly payment plans, which gradually inflate the total cost over the policy term. Tom Banks, car insurance spokesperson at go.compare, emphasized the surprise many drivers feel at this gap: “It may surprise many drivers that there is such a large difference in the cost of car insurance, depending on whether you choose to pay monthly or annually. Our latest data shows you can make huge savings if you’re able to pay upfront for your car insurance. Choosing to pay monthly often involves added interest or admin fees, so paying annually can really help to keep the costs down.”
While monthly payments appeal to some drivers for their perceived affordability and ability to spread costs, the research underscores the financial benefit of annual payments for those with the budget to cover upfront costs. “It may be tempting to opt for a monthly payment as this can make it easier to manage your finances, but with an average saving of £239 for an annual policy, it’s certainly worth considering paying annually if you have the budget to do so,” Banks added.
Beyond payment methods, go.compare’s data outlines additional strategies to reduce insurance premiums, starting with timing. Buying car insurance 26 days before the renewal date can yield average savings of 30%, Banks noted, while using comparison sites streamlines the process: “Using a comparison site like go.compare makes it quick and simple to get quotes from multiple insurers in one place. You only have to input your details once and you can see exactly what each policy includes, all in one place.”
Accurately estimating annual mileage also plays a role in lowering costs, as fewer miles driven typically translate to cheaper premiums. Maintaining a clean claims history is another key factor, with insurers offering discounts to drivers who have not filed claims. “This will help to get a cheaper policy because insurers reward motorists who are claim-free with discounts on their premiums,” Banks explained.
Enhancing vehicle security further contributes to savings: adding features such as wheel locks or insurer-approved alarms can potentially reduce insurance costs. These adjustments—from payment plans to security upgrades—offer UK drivers the chance to save hundreds of pounds annually, providing much-needed relief amid broader cost-of-living pressures that continue to strain household budgets.
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