Monthly car insurance rates as high 40% are ‘tax on being poor’ warns watchdog

Drivers who cannot afford to pay for their car insurance up front face paying 'eye-watering' extra charges if they pay monthlyCar owners are being hit with “eye-watering” annual percentage rates of up to 40 per cent if they pay for their insurance monthly, according to consumer group Which?It says the charges penalises some of the poorest customers who are less able to pay off insurance in one go.

For home insurance, Which?found that customers pay between 31.31 per cent to 34.75 per cent APR on monthly payments. The average across the providers that charge a rate and disclosed it was 23 per cent. But Which? say the risk to insurers is lower than for credit card providers, because the credit being offered is directly linked to the sale of the insurance policy and non-payment by customers can lead to the cancellation of the policy.on their products and those requirements have been further strengthened by the introduction of the Financial Conduct Authority ’s Consumer Duty last year.

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