Martin Lewis issues urgent warning to anyone who pays for car insurance

The Money Saving Expert founder took to social media to warn people that paying monthly for car insurance is a lot more expensive than paying annually

Martin Lewis, the personal finance guru, has issued a stark warning to all motorists, cautioning that it could cost them hundreds of pounds. The founder of Money Saving Expert explained on social media platform X that those who opt to pay for their car insurance monthly should seriously reconsider.

He clarified that paying over 12 months instead of annually is essentially taking out a loan, and the charges can be exorbitant, often exceeding those of typical credit cards. He stated: "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. Avoid if at all possible, more help in I should say "way more than a typical high street credit card.

" Mr Lewis directed his followers to the Money Saving Expert site which offers numerous tips on car loans including never auto-renewing, the optimal time to get car insurance quotes (20 to 27 days before the policy start date), ensuring you're on the electoral roll as it can affect costs, and that for the cheapest policies, annual payment is usually required. One follower commented that the difference for them was minimal, stating: "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. " However, Martin responded: "You must be on a low apr and low premium - for many its £100s.

" One customer pointed out the financial pressure caused by rising prices: "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. " Meanwhile, another expressed gratitude for bringing the issue to light: "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. "

The Money Saving Expert has previously indicated that the optimal time to renew is precisely 23 days before your policy lapses. He also cautioned: "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, reports the Express.

Furthermore, he advised that insurers calculate their renewal quotes based on 'actuarial risk', suggesting a procrastinated approach can elevate premiums substantially.

His research exposed some companies charging up to double for last-minute renewals. Speaking on ITV's Tonight programme, Martin Lewis stated: "It seems absolutely ridiculous but insurance pricing is all about actuarial risk. "

He explained the rationale behind early-bird discounts: "And what their risk shows them is the type of people who get car insurance early are a lower risk so they give them a lower price. You might pay nearly double if you wait until the last minute to get your car insurance. ".