Business · Companies · 3 hrs ago
Which? criticises high interest rates on monthly car insurance
Which?
says some UK drivers face high interest rates when they pay for car insurance monthly.
Monthly payments are treated as credit, so providers can add interest or fees, making cover cost more than paying upfront.
Which?
tested quotes from 30 insurers and brokers using the same driver profile and found five providers with rates it considered excessive.
The highest listed rate was 53%, charged by City Insurance; the investigation also found a median rate of 26.2% across 36 quotes.
In one example, a Rightsure policy rose from £2,583.23 to £2,950.98 when paid monthly.
The extra cost can weigh most on people who cannot pay upfront, according to Which?.
The UK financial regulator ruled out a price cap or ban on interest for monthly policies in March 2026, while Which?
is urging the Prime Minister to ban two-tier pricing in the upcoming budget.
Which? says monthly car insurance payments can impose a “poverty premium” on drivers who cannot afford to pay upfront.
Its mystery shopping investigation examined quotes from 30 car insurance providers and brokers.
Which? found five companies charging interest rates above typical credit card APRs, with City Insurance recording the highest rate.
The median APR across 36 quotes was 26.2%, compared with a 25.9% median credit card APR.
The FCA ruled out a price cap or ban on interest for monthly policies after a market study in March 2026.
- Who
- Which? criticised car insurance providers and brokers. The FCA is the regulator mentioned in the report.
- What
- Which? said high interest rates on monthly car insurance can increase costs for customers who cannot pay upfront.
- When
- The article was published on 13 October 2026. The FCA concluded its market study in March 2026.
- Where
- The investigation used a customer profile based in Sheffield, UK.
- Why
- Monthly payment plans are credit agreements, so providers may charge interest or administration fees. Which? says some financially pressured customers pay more as a result.
Which?
FCA
Regulation
Which?
Which? called for a ban on two-tier pricing for motor insurance, saying the practices it found were unfair to customers least able to pay.
FCA
The FCA ruled out a price cap or a ban on interest for monthly policies, saying its existing rules were sufficient to address poor behaviour.
The FCA concluded a market study and ruled out a price cap or ban on interest for monthly car insurance policies.
The Mirror published its report on Which?’s findings about interest rates on monthly car insurance.
- Providers and brokers investigated
- 30
- Quotes analysed
- 36
- Median APR
- 26.2%
- Median credit card APR
- 25.9%
- Highest reported APR
- City Insurance: 53%
- Added cost cited
- Up to £367.75 on a Rightsure policy
Related
LSEG in talks to buy financial data provider Octus for about $3.5bn
8 hrs ago · 4 sources
More than half of surveyed British CFOs expect AI-related job cuts
1 hr ago
JTI introduces dissolvable PERLZ nicotine pearls in the UK
4 hrs ago · 2 sources
Lando Norris invests in UK hospitality and ticketing company Seat Unique
2 hrs ago
What people are saying
Too many consumers have already been pushed out of driving or into financial peril because of these unfair pricing practices that we’ve found can charge less wealthy customers more.
Our latest investigation exposes the consequences of the regulator shying away from its responsibility to ensure competition works for consumers.
The Prime Minister has pledged to create more ‘breathing space’ for consumers, and that’s why we’re urging him to use the upcoming budget to announce a ban on two-tier pricing for motor insurance.