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Why not, means I don't have spend a chunk in one go
Because paying a smaller chunk every month adds up to more than paying it one go
Admiral/Bell/Elephant
- Thread starter LeeUK
- Start date
Because paying a smaller chunk every month adds up to more than paying it one go
They charge a fair bit then! Chris Knott charged me £30 for paying monthly. Thats £30 for the whole year.
Why not, means I don't have spend a chunk in one go
This is a way of looking at money that i just cannot understand. In your case the charge is not much, but even so you are knowingly paying an EXTRA £30, purely to delay paying in full. Its all money, with things like this you would save £30 regardless of when you pay, delaying it has no purpose.
Because your average Joe (mostly nippers) probably cannot afford to ***** £600-2000 on insurance in one go.
I couldn't until the year before last, and had to pay monthly. £30 is nothing for the convenience of paying as you can afford it rather than straining to raise the funds.
You can't realistically find a new 0% credit card deal every year for your car insurance, either.
I couldn't until the year before last, and had to pay monthly. £30 is nothing for the convenience of paying as you can afford it rather than straining to raise the funds.
You can't realistically find a new 0% credit card deal every year for your car insurance, either.
If you can't afford to insure a car then putting petrol in it and keeping it in a roadworthy condition will also prove challenging. I passed a dealer yesterday and they were selling off the part ex's and the was a BMW for £900 with a sign saying finance available and I remember thinking if anybody needs finance on a £900 car they should really be questioning if they can afford to own a car lol
Have you ever run a business?
I pay mine in one go, it's only ~£700.
But from a different perspective if the cost of borrowing is less than the cost of not having that money spare, then it's definitely worthwhile. If you don't have very many savings for instance, keeping a thousand back but paying your insurance in monthly installments if the increased cost is reasonably low is just prudent and makes financial sense.
I well know this, and yes i have and do.
Insurance however, is, well, see ubersonic's post. Its just pointless. Its a really bad value loan, you would be better off in a lot of cirumstances putting it on a normal credit card, or even just an overdraft for heavens sake
Soldato
- Joined
- 18 May 2010
- Posts
- 12,870
Dont do it, if the insurance is to high then you need to sell the car and find something cheap to run, you are shooting yourself in the foot paying monthly for car insurance
I well know this, and yes i have and do.
Insurance however, is, well, see ubersonic's post. Its just pointless. Its a really bad value loan, you would be better off in a lot of cirumstances putting it on a normal credit card, or even just an overdraft for heavens sake
For some it's a bad value loan, but you look at each deal on its own merits. If it's a ridiculous APR or equivalent then it's probably not worth considering. If it's for the sake of £30 - then having the money in the bank is probably better than saving that £30 over the course of a year.
You said
It does have a purpose, and running a business you should clearly see that.
What is the point of that reply relating this to a business situation? There is no purpose in delaying it, it is a small personal insurance policy. Although in this case we are talking just £30, which negates the problem somewhat, it is still bad practice to have done it that way. In a lot of circumstances people still pay this sort of thing monthly, and at a much higher cost than being discussed here.
Because you look at and evaluate finances differently when you've run a business. I can understand having to explain this to most people, but I'm bemused as to why I'm having to explain the value of cash flow and money in the bank versus an increased cost over time to a business owner.
You can apply the same concepts to personal finance.What if his car needs a big bill next month? What if his boiler breaks down? Either way, big bills could be a possibility and he might not have easy access to cheap credit to cover them.
For the sake of £30 over the period of a year, this is a very cheap way to cover this possibility and ensure he has enough money in the bank to cover things like this.
Because you look at and evaluate finances differently when you've run a business. I can understand having to explain this to most people, but I'm bemused as to why I'm having to explain the value of cash flow and money in the bank versus an increased cost over time to a business owner.
What if his car needs a big bill next month? What if his boiler breaks down? Either way, big bills could be a possibility and he might not have easy access to cheap credit to cover them.
For the sake of £30 over the period of a year, this is a very cheap way to cover this possibility and ensure he has enough money in the bank to cover things like this.
You are not needing to explain anything to me, i am more than versed in finance.
The point is that you are just talking rubbish and using the fact that in this one scenario the cost is fairly low in absolute terms to defend your point.
The fact is that this is a small personal insurance policy discussion. The bills in all cases will be fairly minimal. Minimal enough that they can put but elsewhere in the event of not being immediately affordable. The larger the loan, the more in absolute terms taking these bad value loans will cost.
- Are you disagreeing that taking out finance at an extortionate rate is a bad idea and should be avoided?
- Do you agree that insurance finance should be avoided in all but very rare circumstances, as it is appaulingly bad value, and of an amount which to most people is easy to raise by other means?
Well then save the finance for an emergency, that might not happen, but you will be paying interest with insurance on the drip.
I quoted your post. I pointed out where you were wrong. Where's the problem?
I'm sorry if you've taken anything I've said the wrong way, but you specifically said paying £30 extra a year for the benefit of spreading payments monthly "serves no purpose". And I just pointed out where you were wrong in that particular instance.Absolutely not - bad finance should always be avoided.
I think you should always judge every case on its own merits - making blanket statements doesn't help anyone. For most people running a car, paying their insurance up front and in one go makes the most sense from a financial perspective. In the original poster's case, spending an extra 20%+ on the monthly payments is indeed more than likely a waste of money, I think we can agree.
There might be a very specific set of circumstances surrounding someone where they need to pay monthly for their insurance, despite a heavy APR but this would generally be very rare.
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I think we are agreed, other than in that one isolated situation where the absolute cost to the guy was just £30.
This could still be bad finance if the loan amount was low, but we dont have the figures. Although it obviously doesnt matter in this case due to it being such a small figure, i'd still bet that the £30 was wasted.
This could still be bad finance if the loan amount was low, but we dont have the figures. Although it obviously doesnt matter in this case due to it being such a small figure, i'd still bet that the £30 was wasted.
That's true, his insurance might have been £300 in which case it would have been a bit silly.
I was thinking it might be ~£1k, which is a lot of money to a lot of people out there to pay in one go.
A lot on OcUK are well above the national average in terms of incomes, so you might look at the median UK income and say "Well you should be OK on that"... but there are a lot of people in the UK that do struggle week to week, month to month where unpredictable big bills that crop up do affect their lifestyle and finances significantly. And it's especially worst around Christmas if you have a family. So I can understand why people would want to spread the cost under certain circumstances, but I'd advise them where possible to use 0% rates on credit cards (as you've said) where possible to get the finance effectively for free, as long as they're disciplined and pay off a proportion of the principal each month.
I was thinking it might be ~£1k, which is a lot of money to a lot of people out there to pay in one go.
A lot on OcUK are well above the national average in terms of incomes, so you might look at the median UK income and say "Well you should be OK on that"... but there are a lot of people in the UK that do struggle week to week, month to month where unpredictable big bills that crop up do affect their lifestyle and finances significantly. And it's especially worst around Christmas if you have a family. So I can understand why people would want to spread the cost under certain circumstances, but I'd advise them where possible to use 0% rates on credit cards (as you've said) where possible to get the finance effectively for free, as long as they're disciplined and pay off a proportion of the principal each month.
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Thats the point, it probably was the case.
Then we come back to the prospect of the point of even financing car insurance. I mean in the context of other bills which people encounter this is so so small. Not being able to afford it once per year having known it was coming for that whole year - i just do not understand. Its not a big bill, and its a rare known bill.
Then we come back to the prospect of the point of even financing car insurance. I mean in the context of other bills which people encounter this is so so small. Not being able to afford it once per year having known it was coming for that whole year - i just do not understand. Its not a big bill, and its a rare known bill.
It would be funny to see the stats if a company offered something like that as a bonus if you paid upfront, i bet a lot more people would take it even though financially it would be the same
