Choosing to pay monthly for your car insurance could add £257 to the total cost for young drivers, new figures show.

Research from GoCompare Car Insurance shows, between them, British motorists pay £544million extra by choosing to pay in in instalments – with the average driver able to save £55.36 by switching to a lump sum.

That's because the vast majority of insurers charge interest as well as premiums for people splitting their bills, adding between 6.8% and 17% to the total cost.

But it's something almost one driver in three does, with people on lower incomes far more likely to pay this way despite it generally costing more.

And there's another risk too.

GoCompare chief executive Lee Griffin said: “The added danger here is that people paying monthly are statistically more likely to renew again with the same insurer, without checking the total cost.

"It can become a cycle of paying more, for people who can least afford to do that."

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He added: “People paying monthly may see having to cancel a direct debit and set up a new payment as an additional hassle. Equally, if you pay a smaller amount monthly, you are likely to be less price-sensitive than if you were to pay the full amount in one go."

Not every insurer charges extra for splitting the cost, while the amount extra added on varies considerably between firms, which means as lond as you pay attention, you should be able to get a cheaper deal without needing to pay up front.

“At the very least, you need to check what your insurer is charging for monthly payments and if you are with an insurer that charges 17% extra for monthly payments, it is going to be well worth shopping around for a better deal,” Griffin said.

GoCompare has the following tips for people looking to stop paying in instalments:

• Be aware of the costs involved with paying monthly.  While it spreads the cost into manageable chunks, it generally isn’t free. Your insurer should displays exactly what you will pay for each policy if you choose to pay monthly and also allows you to rank results by the instalment total

• As always, the easiest way to bring down the cost of your insurance is to switch to a better deal

• Do you still need to pay for your cover monthly?  Many people opt for monthly payments when they first start paying for insurance.  It is worth reviewing if you really need to pay that way now;

• If you need to spread the cost of your insurance, consider taking out a 0% purchase credit card and set up a direct debit that will clear the total payment over the 12-month term of the insurance.  Overall this will work out cheaper than paying the interest charged by insurers

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