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

The Money Saving Expert founder says anyone who pays for their car insurance monthly should think again

Martin Lewis has issued a stark warning to all drivers about an issue that could cost them hundreds of pounds. The founder of Money Saving Expert advised those who opt to pay for their car insurance on a monthly basis to seriously rethink their decision.

He likened paying over 12 months instead of annually to taking out a loan, with charges often surpassing those of standard credit cards. On X, formerly known as Twitter, Martin cautioned: "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"

He urged his followers to avoid this if possible, directing them to his Money Saving Expert site for further advice on car loans, including never auto-renewing and that the most affordable policies usually require an annual payment. The site also reveals the best time to get car insurance quotes - 20 to 27 days before the policy start date, and emphasises the importance of being on the electoral roll as it can impact costs.

One follower responded saying 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 retorted: "You must be on a low apr and low premium - for many its £100s," reports Birmingham Live.

Another customer highlighted the financial strain brought about by escalating costs, stating: "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."

A third individual expressed gratitude towards Martin for his advice, saying: "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 comment pointed out that many individuals simply can't afford to pay annually. To which Martin responded: "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."