Some motorists who pay monthly for insurance ‘charged annual rates close to 30%’

Some motorists are continuing to pay high interest rates when spreading the cost of their car insurance, according to analysis by Which?

The consumer group said some firms are charging annual percentage rates (APRs) comparable to expensive credit cards.

Some firms are still charging APRs of close to 30% on monthly motor insurance payments, Which? said.

Which? said it had found that between February and March 2026, several firms were charging APRs above 25% and some were charging as much as 29.9%.

It said that paying monthly is often the only realistic option for households facing financial pressure, creating a “poverty premium”.

Two years ago, some firms were charging rates above 35% APR, according to Which?

It said that while some providers have lowered their rates since then, it believes that progress has been too slow.

Which? said that between February and March, it attempted to contact 61 car insurance brands, asking about the representative APRs charged to their customers who pay monthly.

Some 48 responded with their rates, or said they did not charge extra for paying in instalments

Rocio Concha, director of policy and advocacy at Which? said: “Millions of motorists rely on monthly payments to afford essential car insurance cover, yet many are still being charged interest rates comparable to an expensive credit card.”

A spokesperson for the Association of British Insurers (ABI) said: “The industry recognises that many households are under financial pressure, and it understands why spreading the cost of cover is essential for many motorists.

Premium finance is widely used across the market with charges that can differ between insurers and by product.

“Our members remain committed to improving outcomes, and this includes being open about the fact that providing this service involves genuine operational costs – including keeping cover in place for a period even when payments are delayed or missed.

“Our premium finance principles make clear that any charges must be fair, transparent, and reflective of the costs incurred by insurers. The FCA’s (Financial Conduct Authority’s) own market study found that premium finance can deliver fair value for consumers and that the overall cost of premium finance has fallen since 2022.”