Cheap Car Insurance for Bad Credit
Car Insurance for Bad Credit - Compare Cheap Quotes
Car insurance providers use a wide range of variables when they’re calculating your insurance premiums, each of which is intended to help the insurer understand how risky you might be as a policyholder.
For instance, each of the following factors can all influence the cost of your insurance:
- where you live (and the crime rate in your area)
- your occupation
- Your age
- the type of car you drive
- where you usually park your car
- how long you’ve held your licence
- Whether or not you’ve claimed on your insurance in the past five years
- whether or not you have any penalty points or driving convictions
- the size of your No Claims Discount
- the level of coverage you’d like to take out
- the amount of excess you’re willing to agree to.
Your credit history usually isn’t one of the factors car insurance providers use when assessing your risk profile in this way, at least not in the UK. Insurance companies in some other countries like the USA do often use a driver’s credit history in their insurance premium calculations, which bad credit usually isn’t a factor here.
However, if you have a bad credit history it can still play a role in the types of car insurance policies you’re able to take out in the UK, because some UK insurance providers may be less willing to allow you to pay for your car insurance on a monthly basis if you have a history of missed payments, CCJs or an Individual Voluntary Arrangement.
Fortunately a growing number of providers are willing to agree to monthly payment plans when you’re looking for car insurance for bad credit. The best way to find these providers is to use our car insurance comparison service to compare quotes, and then choose the ‘pay monthly’ option in order to sort the providers that are willing to allow you to pay monthly at the top of the list.
Why would having a bad credit history determine whether or not I can pay monthly?
When you take out a new car insurance policy and opt to pay for it on a monthly basis you’re essentially taking out a line of credit for the full premium amount, and then paying it off over 12 months (or sometimes 10 months, depending on the provider).
Larger insurers will arrange this credit themselves, while smaller providers and local car insurance brokers may arrange credit through a separate finance company, but either way a credit check will be run when you opt to pay monthly.
Some providers may refuse to let policyholders pay their insurance premium on a monthly basis if the policyholder has a low credit score or a history of missed payments, while others may increase the APR that applies to the payment plan to offset the higher risk the poor credit history represents.
Do insurance companies and price comparison sites run credit checks if I opt to pay annually?
No, if you aren’t interested in a monthly payment it’s highly unlikely a credit check will be performed, since you aren’t being offered a credit facility alongside your car insurance policy.
However, you may still see a mention of the quotation or price comparison on your credit report, but this will be a ‘soft search’, meaning it will only be visible to you and was performed to confirm your identity rather than to check your credit history.
What can I do if I can’t afford to pay for car insurance on an annual basis?
Many drivers with higher than average car insurance premiums (newly qualified drivers, unemployed drivers, young drivers or drivers with penalty points or driving convictions, for instance) may be unable to afford to pay their full car insurance premium as a lump sum when they take out the policy, which is why a monthly payment plan is often so attractive for these motorists even though it costs a bit more overall.
If you can’t afford to pay for your car insurance on an annual basis but are worried you won’t qualify for a monthly payment plan the best thing to do is use a price comparison site like Quotezone.co.uk.
We enable you to compare quotes from over 110 different car insurance providers in a matter of minutes, which means even if you have a bad credit history, you stand a much better chance of finding an insurance company that will let you pay for your insurance on a monthly basis when you use our comparison service.
Should people with bad credit opt for third party only insurance in order to reduce their premiums?
In the past price-sensitive motorists often opted for third party only insurance, because it was often a little cheaper than third party, fire and theft or fully-comp due to the fact it was less comprehensive.
However, third party isn’t always the cheapest option anymore even though it is the least comprehensive, because many insurance providers have begun hiking premiums for that level of coverage to reflect the fact that it’s often favoured by higher risk drivers.
It’s also worth bearing in mind that if you do need car insurance for bad credit your history of missed payments or CCJs probably won’t influence your premium directly, no matter which level of coverage you opt for. It can influence whether or not you qualify for a monthly payment plan, of course, as we’ve already mentioned, and there may be other correlated variables that could influence your premium (being unemployed, for example), but your poor credit history isn’t likely to lead directly to higher premiums.
So even if you do need car insurance for bad credit, the best plan is to compare quotes for all three levels of coverage and then go with the provider that offers the best policy at the best price.