Which? wants a ban on charging more to pay monthly
Which? today asked the government to ban charging drivers more to pay car insurance monthly. Some of its August quotes had APRs above 50%.
The consumer group published the research on 14 October. It wants the ban announced in the upcoming Budget.
That's Which?'s call. The government hasn't proposed it.
What Which? found in its August quotes
In August, Which? collected 36 online quotes for one driver. The driver was 42, lived in Yorkshire and was insuring a Ford Puma through a comparison website.
Half the quotes carried an APR above 25%, Which? says. Seven were above 30% and two were above 50%.
APR is the annual percentage rate. It's the standard way of showing the total cost of borrowing, including interest and flat fees.
For 22 of the 36 quotes, paying monthly cost 10% to 16% more than paying upfront. On those quotes it added as much as £368, Which? says.
Only two providers charged nothing extra for paying monthly.
Which? says the exercise is "a snapshot of the quotes available to one driver, rather than a representative picture of the whole market". So don't read those percentages as yours.
What insurers told Which? earlier this year
In February and March, Which? asked 61 car insurance firms what APR they charge monthly payers. Just 48 revealed their rates.
Among those 48, the average was 23%. None charged more than 30%.
Which? says the two sets of figures "aren't directly comparable". The survey asked firms directly.
The August mystery shop looked at quotes to one customer through a comparison site.
Which? has run four such surveys in more than two years. Among firms it surveyed in both April 2024 and 2026, the average APR fell by around five percentage points.
What Which? is asking for
Which? wants an end to what it calls "two-tier pricing", where a monthly payer pays more for the same cover.
Rocio Concha, Which?'s director of policy and advocacy, said: "Too many consumers have already been pushed out of driving or into financial peril because of these unfair pricing practices."
She added: "We're urging him to announce a ban on two-tier pricing for motor insurance in the upcoming Budget." The "him" is the Prime Minister.
Which? also argues that monthly car insurance is a loan tied to a policy. The policy can be cancelled if you stop paying, Which? says, and it believes that raises questions about whether high rates are justified.
What to do if you pay monthly
Get two numbers before you choose: the total cost paid upfront and the total cost paid monthly. The gap between them is what the credit costs you.
Click through from a comparison site to a quote and the insurer typically shows both totals, the Financial Conduct Authority (FCA) found. You'll also see the deposit, the number of payments, their size and the APR.
If you can't see them, ask.
Don't read the APR as a flat uplift. Which? points out that a 30% APR doesn't mean you pay 30% more overall.
You repay the loan as the year goes on, so you owe less of it for most of the year.
The FCA's worked example assumes a 10% deposit followed by 11 payments. On deals like that, the extra cost is usually far smaller than the APR suggests, but it's still real money.
If you can pay for the year in one go, do.
I'd also check the renewal letter, not just new quotes. Our guide to why your car insurance has gone up covers what that letter has to show you.
The premium itself is the bigger number. How mileage affects car insurance explains one of the few inputs you control, and the rest of our insurance guides cover the others.
What the regulator has already done
The FCA has already looked at this. It opened a market study into premium finance in October 2024 and published its final report on 3 February 2026.
Premium finance is the industry's name for paying in instalments. The FCA says it was used on 48% of motor and home policies in 2023, including 15 million motor policies.
Less than 3% of that motor finance was interest-free, the FCA found.
The FCA says prices have fallen since it started looking. The firms in its sample cut average APRs from 23.3% in 2022 to 19.2% in 2026, saving about £8 a year on a typical motor policy.
The FCA directly challenged four firms over high prices. Three of them cut their APRs, from 38% to 31% on average, the report says.
But the FCA decided against a cap on APRs or a ban on charging interest. Its report says "a price cap or ban is not warranted", and that an interest ban could push premiums up or shut some drivers out of cover.
So the regulator's position is to keep watching individual firms under its Consumer Duty rules. Which? says that "light-touch approach" hasn't been enough.
Common questions
Is it cheaper to pay car insurance annually?
Usually, yes. Most insurers charge interest if you pay monthly, so the total over the year is higher than the upfront price. In Which?'s August quotes, 22 of 36 cost 10% to 16% more paid monthly. A few providers charge nothing extra, so always compare both totals.
What is a normal APR for monthly car insurance?
There's no set rate. The 48 insurers that revealed their APRs in Which?'s survey in February and March 2026 averaged 23%, and none went above 30%. The FCA's sample of firms averaged 19.2% in 2026. Quotes to one driver in Which?'s August mystery shop ranged well above that, with two over 50%.
Does a 30% APR mean I pay 30% more?
No. APR shows the cost of borrowing over a full year, but you repay the loan in instalments as the year goes on. Which? says a 30% APR doesn't mean paying 30% extra overall. The gap in its quotes was 10% to 16% on most deals.
Is the government going to ban charging more for paying monthly?
Nothing has been proposed. Which? has asked for a ban in the upcoming Budget. The FCA looked at a cap and a ban in its market study and decided in February 2026 that neither was warranted.
Does paying monthly affect my cover?
The cover is the same. But paying monthly with interest is a credit agreement linked to the policy, and Which? says the policy can be cancelled if you fall behind on payments. Check your finance agreement for what happens if you miss one.