That's how much extra motorists who pay monthly shell out for insurance on average, compared to those who pay for the whole year in one go.
New sales data, shared with Which? by comparison website GoCompare, shows that the gulf between what these two groups pay has been growing.
In September, the average annual premium paid by GoCompare users was £583, but monthly payers were billed £892 across the year. This difference of £309 is £58 (23%) bigger than in September 2022 and £112 bigger than in September 2019.
The difference is partly explained by the fact that younger drivers - who pay the highest premiums and have seen the biggest premium increases - are also more likely to pay monthly.
However, our investigation has found additional charges for spreading payments exacerbate their costs further, with interest rates of more than 30% not uncommon.
Hundreds in interest
To see how much paying monthly can cost you, last November we ran quotes for three drivers on a major comparison website. Among the 15 cheapest monthly deals available, a 59-year-old from Kent was quoted £41, on average (on top of a £331 premium), for spreading his costs.
A 39-year-old south Londoner, with higher premiums, faced double this (£82). But for an 18-year-old driver from Warwick - whose annual premiums began at nearly £3,000 - paying monthly added £459 on average.
For the teenage leisure centre worker, the biggest proportional increase for paying monthly came with a Premier Online product from 1st Central - 15%, or £504. The annual price was £3,388 - but paying monthly then added an extra £504.
A 1st Central spokesperson told us: 'At 1st Central we focus on keeping premiums as low as possible, whether customers are paying monthly or annually. Those who opt to pay monthly will pay slightly more, as it costs more to provide insurance in that way. We work hard to support our customers and recognise that circumstances can change throughout a policy, so we encourage customers to contact us in this eventuality.'
The costliest deals for paying monthly
More customers paying monthly
Car insurance premiums have been relentlessly on the rise since late 2021. Last week, price comparison website Confused.com reported the average quote (for Oct-December 2023) to be an eye-watering £995 - 58% (or £366) higher than it was a year earlier.
The pain gets worse the younger you get. The average driver under the age of 43 will be lucky to be quoted under £1,000 - while the average quote for an 18-year-old was £3,162.
It's no surprise that the number of customers using finance to help pay for their insurance seems to be growing. Last November, Premium Credit - a company which works with insurers to arrange premium finance for policyholders - reported that the number of customers considering credit as a means of paying for insurance had risen 'substantially' over the year.
Value for money?
In recent years, the industry regulator the Financial Conduct Authority (FCA) has raised concerns about whether the interest rates applied to monthly payers' premiums represent fair value, particularly where these rates are high.
Questions remain over whether 30%-plus interest rates reflect the actual cost to the insurer of spreading payments, or whether younger drivers must pay proportionally more to spread payments, on top of higher premiums.
A letter to insurance CEOs in September 2022 said: 'The combination of premium finance products with high APRs and typically lower associated credit risk for these types of products (as policies can be cancelled in the event of non-payment) could potentially mean some products may be in breach of our rules.'
Insurance PostFind out more:'The regulator must outline an action plan'
Rocio Concha, Which? Director of Policy and Advocacy, says:
'Car insurance is a legal requirement for motorists - and yet those who can't afford to pay in one go annually are often being penalised through unjustifiably high interest rates on their monthly repayments.
'That isn't right - and it's now up to the financial regulator to outline an action plan to tackle the unfair costs of paying monthly for insurance. The FCA must monitor the issue closely, publishing an analysis every six months of firms' rates, naming and shaming the worst providers.
'The regulator should also assess how much it costs firms to provide premium credit and shouldn't hesitate to take action against providers charging monthly customers excessive interest rates.'
How you can bring down your premium
Our three tips can help you get the best possible premium and spread payments in an affordable way:
Shop around and haggle: Consider other forms of credit: Add another driver: Find out more:source https://www.which.co.uk/news/article/paying-monthly-makes-car-insurance-even-pricier-acZDz8B4eRR0