If you have ever had that hollow sinking feeling in the pit of your stomach you will sympathise with the fate of the majority of people who try to find out how much their car insurance is going to cost them this year. Prices have shot up horrifyingly in the last 12 months, and the renewal notice for many is a very unwelcome visitor indeed.

There was a time when we all assumed quite naturally that we would have no real problems in paying our car insurance premium every year, in full, the moment that it fell due. Literally millions of people are now finding that that easy payment has now become a real financial burden. It is little surprise that no deposit car insurance has become such a popular product in such a short time.

The concept behind it is quite simple; the insurance premium is split into 12 equal segments, each one of which is due to be paid monthly. This is not, strictly speaking, a no deposit scheme but this minor technicality is neatly got around by the fact that the first repayment is paid by credit card, which defers the payment by the client for a month at least. It does have to be paid of course, eventually, and on the month that it becomes due to the credit card company it must be borne in mind that one of the regular monthly payments has to be made as well, and so allowance must be made for this in the budgeting.

Nothing comes for free in this world and the fact that the insurance is monthly paid gives the insurance companies a wonderful opportunity to increase the cost! That is perhaps being a little unkind to them since traditionally insurance companies have made the vast bulk of their profits from investing the premiums that there policy holders have given to them, and since a no deposit policy is paid off over a full year this means that that money is not available to them in full for 12 months, during which time they still have to indemnify the insured person against the costs involved in the event of an accident, and so allowing credit in this way can adversely affect their cash flow. You really need to get as many quotes as you can fire a good price comparison engine because the extra fees charged by insurers can vary from anywhere between about 5% and 24%, and these are figures that can make a substantial difference to your budgeting. A good price comparison site should be able to tell you what the premium would be if you paid in full, as well as the monthly repayments, so that you would have a chance to make up your own mind which direction you want to go in.

Do remember that, as ever, the cheapest price is not always the best buy in before deciding on a policy you should check out the small print to make certain that everything that you wish to be covered, is indeed covered, and that there are no excessive charges that you may face in the future.

One thing to be absolutely certain of is that once you take on a commitment to pay for an insurance policy you must carry that commitment through to its conclusion. Insurance companies take a very dim view of people who take out a policy and then subsequently cancel their repayments; information like this they shared between insurers and those who follow this type of practice may well find themselves on a future blacklist.

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Auteursrecht 2004