| Link(s): | Latest research reveals the interest rates insurers charge for paying in instalments – Which? |
Context
Which? has published the latest results of its ongoing research into the interest rates that insurers charge for allowing customers to pay their insurance premiums in instalments.
Key points to note and next actions
- Interestingly, none of the APRs identified by Which? in the home and motor insurance markets are 30% or more – they are all now under 30% (an APR figure the FCA cited as being ‘high’).
- Some of the terminology in the Which? article demonstrates why APRs are misunderstood.
- The latest position from Which? is that they feel that an APR of 25% is ‘unfair’. Using APRs as a measure of interest rate fairness is perhaps flawed.
- Of the 51 insurers and distributors listed in the Home Insurance APRs table, 12 (23.5%) either provided no response or did not disclose an APR. 15 (29.5%) indicated that they provided instalments at no cost. 12 (23.5%) had APRs of below 20%, 5 (10%) were between 20% and 25%, with the remaining 6 (a little under 12%) being over 25% but less than 30%.
- Of the 61 insurers and distributors listed in the Car Insurance APRS table, 13 (21%) provided no data or response. Only 2 (3%) offered no charge. 22 (36%) had APRs of below 20%, 7 (11.5%) were between 20% and 25%, and 18 (29.5%) were over 25% and under 30%.