The average comprehensive car insurance premium has fallen £53 since lockdown began, new research has revealed.
Car cover fell to £694 in August, following gradual decreases in July and June and it means they’ve fallen nearly 10 per cent since the coronavirus lockdown began, forcing drivers off the road and insurers to reflect that.
On a three month rolling basis, premiums have fallen to their lowest level since summer 2016, according to Compare the Market.
Meanwhile, separate data shows that more motorists are shopping around online for finance deals rather than simply allowing dealerships to take charge.
More than half of car finance purchases will be online for the first time ever, the exclusive research from Zopa revealed.
It has come as a result of lockdown but also because potential buyers can now easily compare deals online for such a big purchase and take their time, rather than simply sticking to whatever the dealership suggests.
Insurance costs fall following years of rises
Dan Hutson, head of motor insurance at Compare the Market, said: ‘The decreased cost of car insurance premiums will be welcome news for drivers, following years of rising costs.
‘Some insurers have passed on savings received as a result of fewer claims during the coronavirus pandemic from the reduction in cars on the roads.
‘This could help families struggling financially as a result of the pandemic. Insurers should continue to support their customers wherever possible.’
Despite the falls, the cheapest premiums available on the market have increased slightly.
Over the past three months, the average cheapest policy available cost £598, compared to £594 in the previous quarter.
There was a gap of £103 between the cheapest and average premiums over the last quarter, showing that shopping around remains an effective way to save money on car insurance.
Coronavirus has had a big impact on the motoring industry with the Financial Conduct Authority in May encouraging all car insurance providers to reassess the risk profile of customers which may have changed significantly because of the coronavirus.
In addition, it asked motor insurers to waive cancellation fees and other charges associated with adjusting policies.
The reductions in costs follow a number of years of high premiums.
Over the past five years there have been changes to government policy which have forced premiums up, including hikes to Insurance Premium Tax, delays to the whiplash reform and changes to the Ogden rate which drove up the cost of claims.
However, the insurance industry has faced significant changes over the past six months as government restrictions have forced many cars off the roads, in turn reducing the volume of claims and pushing premiums down.
Customers are encouraged to shop around for their insurance rather than let their policy renew to see if they could save money.
Half of drivers now open finance products online
Meanwhile, more than half of car finance purchases will be online for the first time ever, separate research from Zopa has revealed.
Some 56 per cent of transactions are set to be on the internet, while purchases are expected to rise by 33 per cent.
Some 60 per cent said searching online for car finance is their preferred option whilst 63 per cent think it’s more convenient.
Potential buyers are also put off by the traditional process of a car dealership offering the finance deal as half admit they are nervous about the prospect of negotiating costs with a dealer face to face.
A further 49 per cent of those surveyed suggest haggling simply isn’t a part of modern life and 13 per cent say they have never negotiated when buying something.
Another 12 per cent of people who bought a car in the last five years admit they accepted a deal on car finance from a dealer that they didn’t feel was good value and 17 per cent decided to avoid the process altogether and put off buying a car.
The shift online comes as more people see the benefits of organising car finance themselves, with 61 per cent saying shopping online gives them greater control and 72 per cent preferring to shop at their own pace.
The ease comes from access to information too, with 36 per cent valuing the transparency of comparing deals online and 28 per cent said the ability to research running costs at the same time as the car finance options allowed them to manage the financial decision better.
Tim Waterman, chief commercial officer at Zopa, said: ‘For a long time, dealers had control of the customers’ finance deal, and until recent restrictions put in place by the FCA, could be incentivised to offer a higher loan APR.
‘While of course not all dealers are the same, this situation has caused consumer mistrust.
‘Wider availability of online finance deals has shifted the control, making it possible for consumers to find a deal that truly works for them.
‘A car isn’t a frequent or low value purchase, so it’s understandable that people want to take their time when finding the right deal and do it on their own terms.’
Opinium conducted two surveys on behalf of Zopa with 4,000 adults in total.
How to secure a good deal on car finance
Zopa shares its tips for how to secure a good deal on a second-hand car and car finance:
1. Start by exploring all your options: With the range of different options available to customers, it can often feel overwhelming. Make sure to explore all options available to you via soft search and opt for one which offers complete transparency and aligns with your financial situation. Not all providers offer soft search, so you’ll need to check before you get a quotation.
2. Get a pre-approved loan sorted: This will allow you to know what options are open to you and you can be confident you’re getting the best deal available. Look at providers that do an initial soft search to give you confidence on approval and the rate you’ll receive.
3. Think about timing: March and September see new cars released, which are often bought through part-exchange deals. This means dealers will have lots of cars to sell, which puts the consumer in a strong bargaining position.
4. Research costs and see how much the vehicle you want is going for elsewhere: You will know what a good deal is if you’ve been able to compare costs yourself, so make sure you look around and see what other dealers are offering on similar vehicles to make sure you’re happy with the price that is being offered.
5. If you want to go direct to a dealer, do your homework: It’s important to remember that not all dealers are the same. Ask friends and family for their recommendations or check out reviews online via Autotrader or Trustpilot.