Tesco and other car insurance customers have been warned they’re overpaying – and that they could save hundreds of pounds each year. A post on X from the official Money Saving Expert account reads: “Do you pay car insurance by monthly Direct Debit? Beware! It’s actually a loan.
“Insurers add £100s interest on top – often more than typical credit cards, for example, Direct Line charges 23% APR, Aviva 16% and Tesco 21%. Here’s what you can do”. An accompanying link directs MSE followers to an article, which explains further: “A monthly payment plan for your insurance is essentially a high-interest loan, and can vary from under 20%, to over 40% APR.”
Experts went on to say: “So pay in full, or if you can’t afford it, use a credit card with a lower interest rate (or better still, a 0% credit card for spending, ensuring your repayments are big enough to clear it within a year).” MSE said achoice has a whopping 48% APR for those who pay monthly, with Aviva’s is at 16%, Tesco’s at 21%, and RAC at 29%.
The article adds that now “could be a great time to get the cheapest quote” adding this is “rarely achieved by staying put and auto-renewing with your existing insurer”. MSE has a handy comparison tool that is free to use – and has proven success.
One fan got in touch to say: “Thank you. My daughter (20) just passed her test. We liked how easy it was to tweak things (start date, job description, adding second driver) and see the cost impact. She now has a year’s insurance at under £60 a month, which is amazing, as well as a new life skill and the confidence that she’ll be able to sort out her insurance next year with the tool.”