Consumers 'should consider a personal loan' to pay insurance
24th July 2008
There are a number of ways to cut the cost of motoring such as learning to eco drive, shopping around for cheap petrol and taking out loans to cover insurance costs.
That is according to Niki Chesworth of the Telegraph who has listed cost-cutting tips for cash-strapped motorists struggling to cope with rising fuel bills.
Chesworth suggests consumers pay their insurance premiums up front. He claims that because insurers charge interest of up to 23.8 per cent APR "half of all motorists who pay their car insurance monthly are collectively paying £624 million more a year than they have to".
He has said that those who cannot afford to pay a lump sum "should consider a personal loan" because "the interest will be far lower".
Consumers have been warned recently by financial advice site, fool.co.uk, that they should not rely on their overdraft for a financial safety net as some banks are withdrawing or reducing customer's overdraft facilities.
Laura Starkey of fool.co.uk explained that overdraft interest rates are often much higher than rates on personal loans and "due to the ‘impermanent’ and ‘informal’ nature of overdrafts, they’re not regulated in the same way as personal loans under the Consumer Credit Act".
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