As per MoneyExpert, around 86% of 185 car insurance policies in UK charge more for paying through direct debit, charging an Annual Percentage Rate (APR) of 21.5%.
Around 86% of 185 car insurance policies in UK charge more for paying through direct debit, charging an Annual Percentage Rate (APR) of 21.5%. Thus, a fully comprehensive average premium of about 762 pounds can increase up to 1,044 pounds while paying through spread payments.
In general, direct debit refers to the payment mechanism provided in some nations in Europe that permits organizations to tell their banks for directly collecting payments from customers' bank accounts.
Sean Gardner, MoneyExpert's Chief Executive said that the direct debit always comes as a nasty trap that can take customers by surprise as insurers generally hide the charges from customers till last moment.
Vehicle insurance is costly and making payments through direct debit has emerged as a popular method as it allows spreading the payments. Insurers claim that by allowing their customers to pay this way, they are lending them a kind of loan. Thus, customers who surveyed for best-suited inexpensive deals might find their efforts going down in vain due to additional charges, concluded Gardner.
"Customers should be made aware of all the charges well before the deal has been made and it is their duty as well as right to ask for any financial implications regarding the deal", said an analyst at RNCOS.
Provident Insurance topped the charts charging an APR of 37.1% on direct debit. It, however, is incorrect to say that policyholders of Provident Insurance who select direct debit payment option are paying higher APR. Since, around 95% of policyholders choose direct debit payment method from insurance agents and are charged with APR of those agents.
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