just a query

my wife has just renewed her car insurance with elephant for this forecoming year.

we paid last year by credit card, which was ok

this year they gave us a price for renewing and said they would deduct this amount from our credit card once again.

we arent able to this this year. so decided to pay via direct debit every month.

when she called them and asked for this service, they informed her that it would cost a further £70 on top of the car insurance to pay this way.

are they allowed to do this. insurance quote was only about £260.00

your thoughts please

You are basically borrowing the money from them, therefore they charge interest/monthly fee and yes they are allowed to do so. Under the circumstances it may be best to shop around and see if anyone else can offer the same or better cover and see how the monthly/overall amount compares to what Elephant are charging.

Yes, it is standard practice for insurers to charge interest if you pay by monthly instalments. However, £70 on top of a £260 quote does seem rather high. Usually the interest is only about 10%, but it varies between different companies.

I've just had a look at the Elephant.co.uk website to try to find out exactly what their interest rate is. I couldn't find anything on there (all it says is that you can pay monthly, but not how much extra it costs), so then I tried to search on Google, but still no luck. Good grief, if they're going to be this secretive about it, I think I'd start getting suspicious!

However, I did come across a post on a message board where someone said that Elephant charges very high interest rates for monthly payments.

Yes they can, I pay mine by direct debit and have just seen that Amber selct who pay my insurance for the year to the company that insures me charge a whooping 35%apr.

So next year when I renew, both me and Gaz are going to pay the whole thing in one go.

Yes they can, as previously stated you are effectively borrowing the premium from them and then paying them back in monthly instalments. However, £70 on a £260 premium does sound extortionate. (My maths isn't great but i work that out to be around 27%) I notice that elephant offer instalment protection cover so perhaps they are adding that to the premium which is bumping it up.

Either way they're sadly not doing anything underhanded so you can either pay by direct debit and pay the extra premium, or as has been suggested, shop around.

DA