Motor insurance customers in the UK are paying less to spread the cost of their cover but fewer have the option to do so.
According to Consumer Intelligence's latest MarketView data, the average cost of credit on monthly motor insurance payments fell from 10.6% in August 2024 to 9.7% in August 2025, continuing a year-on-year decline. Nearly half of active insurers reduced their instalment costs during this period.
The fall reflects a shift in market behaviour. Some providers have withdrawn or changed their instalment models, which has lowered overall averages. Others have introduced simpler methods to spread payments, such as flat monthly surcharges instead of traditional credit agreements, making instalments easier to understand and manage.
At the same time, the proportion of insurers offering a monthly instalment alongside most of their annual quotes fell by 11 percentage points year-on-year, indicating that fewer customers are being given the option to spread payments.
The market has also largely standardised around an 11-month payment plan, now used by around three-quarters of insurers. This change affects how premiums appear to consumers comparing policies based on monthly costs.
The data comes as UK motor insurance premiums remain at historically high levels following a sharp rise in claims costs and vehicle repair expenses. The ABI’s Motor Insurance Premium Tracker reported that the average premium reached record highs in early 2025, putting further pressure on household budgets and prompting greater scrutiny of payment options. Monthly instalments, while more manageable for some policyholders, often carry additional costs linked to credit interest or administrative charges.
Michael Dingwall, insight analyst at Consumer Ingelligence, said the current situation represented a balance between fairness and access. He explained that the market is working to make instalments more equitable but is also limiting who can use them.
Dingwall also noted that maintaining this balance is important to preserve trust and affordability in motor insurance.
As competition and regulation continue to influence how customers pay for cover, insurers are being urged to monitor instalment trends closely to maintain fairness, trust, and commercial balance.
