Martin Lewis gives urgent warning to all drivers and says 'avoid'

The financial guru said some people pay hundreds more

Martin Lewis has issued a warning to all motorists over an issue which could cost hundreds of pounds. The Money Saving Expert founder said anyone who chooses to pay for their car insurance monthly should seriously reconsider.

Paying over 12 months instead of annually is similar to taking out a loan, he said. Charges can be exorbitant and often exceed those of typical credit cards.

On X, formerly known as Twitter, Martin said: "WARNING: Monthly direct debit is a LOAN - they pay the year for you and loan you the money often at 20 - 40% APR way more than a credit card. I'm shocked by how many pay by monthly DD.

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"Avoid if at all possible, more help in I should say "way more than a typical high street credit card." Martin pointed fans to his Money Saving Expert site, which offers tips on car loans including never auto-renewing and the cheapest policies usually require an annual payment.

It also shares when, the optimal time to get car insurance quotes is - 20 to 27 days before the policy start date. It is important to make sure you are on the electoral roll as this affects costs.

One follower commented and said that the difference for them was minimal. They said: "It's only about £15 difference over the course of the year so I prefer that than a relatively bigger chunk disappearing in one go."

But Martin responded: "You must be on a low apr and low premium - for many its £100s." Another customer pointed out the financial pressure caused by rising prices.

They said: "I used to pay my car insurance in a lump sum but since the doubling in price I've had to pay for it by direct debit, no other choice." While a third thanked Martin for his tip and said: "Thanks for raising awareness on this.

"Many people don't know this and it's shocking when I hear people are paying monthly for insurance products." Another person commented to say that many people cannot afford to pay annually.

Martin replied: "My point is it's a COSTLY loan. If you have to, most would be far better to put it on a 0% card and repay it over the 12 months - or even a standard high st card with APR 20%, undercuts many big insurers who charge up to 40% APR."