Martin Lewis 'gobsmacked' as he issues urgent car insurance warning and says 'beware'

He has told drivers to 'avoid' doing this one thing with their car insurance

Martin Lewis has issued a stark warning to anyone who buys car insurance. Motorists paying for their car insurance by direct debit risk paying 'hundreds' more than they should, he said.

Drivers should 'beware' if they are paying monthly rather than annually as it is similar to a 'loan'. In the latest Money Saving Expert (MSE) newsletter, the team said charges can often be more than those of typical credit cards.

The costs are said to have left Martin 'gobsmacked'. It is cheaper to pay on credit cards and repay them each month, MSE said.

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In its newsletter, MSE said: " Do you pay car insurance by monthly Direct Debit? Beware! It's a loan. We're gobsmacked by Martin's poll on X (Twitter), showing c. 1/3 of people pay car insurance this way, as in reality, insurers are loaning you the money to pay annually and can add £100s interest on top, eg, Direct Line 23% APR, Aviva 16% APR, Esure 26% APR, Hedgehog 44% APR, Tesco 22% APR, Beam (AA) 26% APR.

"Many are far higher than a typical credit card (it's cheaper to pay on those and repay them monthly). More help in our Compare+ Car Insurance tool, and How to cut car insurance costs guide."

It comes after Martin took to social media to say that anyone who pays for their car insurance monthly should reconsider. On X, formerly known as Twitter, Martin said on Tuesday (October 8): "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." The Money Saving Expert site offers a number of tips on how to get cheap car insurance.

This includes not auto-renewing and switching insurer and getting quotes between 20 and 27 days before your policy is due to start. Make sure you are on the electoral roll as this also affects costs.