Context
Which? has published updated research information in relation to insurer premium finance interest rates in home and motor insurance, keeping up its pressure on the FCA whilst the Regulator carries out its premium finance Market Study. The updated research, carried out with 52 car insurers and 46 home insurers, asked what rates of interest the insurers charged customers to pay for cover monthly. The research has found that some car and home insurers are still charging annual percentage rates (APRs) equivalent to typical credit card lenders for customers to pay for cover monthly, despite reminders and commentary that this could be excessive.
Key points to note and next actions
- This is the third time Which? has asked firms to provide this data since March 2024. Among the 24 car insurance firms which disclosed rates in all three surveys, the average APR has reduced slightly – down from 23.14% in March 2024 to 21.03% in February 2025.
- Thirty home insurers responded to surveys conducted in August 2024 and February 2025. Of these, three insurers decreased their rates during this period, and one stopped charging altogether.
- All but three of the car insurers who responded charge extra for paying in instalments. By contrast, half of home insurance firms charge the same price whether you pay all at once or in monthly instalments. Among firms that do charge, rates range widely from 12% to over 30%.
- The average APR across car insurers was 22.84%, with the average APR across home insurers being 21.59%. A number of providers still charge more.
- The highest APRs were between 30.72% and 34.08%
- 22 of the 40 motor insurance providers which responded reported APRs in excess of 20%.