COMMENT
Cut the Cost of Your Motor Insurance

Why is it that for many of us, our motor insurance premiums go up each year, instead of down?

Unfortunately, motor insurance premiums seem to have followed this trend for a while. And for those people choosing to accept their renewal quote each year, by letting your policy roll on you're probably wasting a lot of money.

But there are ways to reduce the cost of this cover – it just takes a little time and effort. If you believe potentially saving £100+ is worth a couple of hours work, then read on!

• Firstly, the obvious one – shop around. And this doesn't mean phoning one company and accepting its quote – you need a few to choose from. There was a whopping £700 difference between the highest and lowest insurance quotes I received last year so it can pay to shop around! Use a broker if time is of the essence – Fool partner The Idol can obtain quotes from a number of providers including esure, Endsleigh and Budget.
• Secondly, make sure the right people can drive your car. An 'any driver' policy will cost more – naming drivers can keep the costs down. Adding your partner can often lower your quote; although adding your 19 year old son may have the opposite effect – consider taking him off the policy while he's at university.
• Parking your car in a garage overnight often really does decrease your premium.
• Set a voluntary excess – this can save even more money.
• Ask which security measures result in a discount. If you don't have the alarm or immobiliser recommended it may be worth fitting it.
• Make sure you inform your insurer if your mileage is low and you don't use the car to commute.
• Additionally, obtaining an advanced driving certificate may save you even more money.
• Check the level of cover and read the small print – different companies have different rules regarding protected no-claims discounts for example – check the details carefully.

And when you finally choose a policy, find out if it costs more to pay monthly, rather than annually, upfront. The APR for monthly payments can be as much as 25% - on a £500 policy this will add an extra £125! This is a rip-off that could completely negate all of your money-saving hard work!

Try and pay upfront if you can from your savings. If you really can't afford it consider paying with a 0% credit card – Sainsbury's Bank, for example, is currently offering 0% for 12 months on all new purchases, with cashback or nectar points too. You then have a year to pay this back before paying any interest.

Alternatively, for larger insurance premiums you could consider taking out a cheap loan. Current Moneyfacts table toppers are from Moneyback Bank, Northern Rock and Cahoot (all three of which are in our loan centre), so you could still be saving nearly 20% APR compared to paying your insurance company monthly.

Find a cheaper car insurance quote in our Insurance Centre or you can apply a cheap loan in our Loan Centre.