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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

AIBU to think that this is bloody close to fraudulent?

26 replies

pinktransit · 01/01/2014 19:49

I'm buying my daughter RAC cover for Christmas. I'm on their website, and looking at covering the car rather than personal membership as I drive her car sometimes too.
Anyway - the cost of covering the car for roadside and home is £79.99. This is clearly stated all over the payment page. Then when you click from the default 'annual' payment to 'monthly' payment, it changes to state that the cost is £8.25 a month.

There is no mention anywhere that paying monthly will cost 25% extra. I think that is a horrendous cost, but am more annoyed that however hard I look onsite it's not mentioned. I do realise that there is a cost involved in collecting the money monthly rather than on one go, but it's not that high.
I'm now looking elsewhere for cover - not so much because of the cost, but because I think that it's underhand, and almost fraudulent.

I am pretty good at maths, and at converting a monthly cost into an annual price, but not everyone is.

OP posts:

ZillionChocolate · 01/01/2014 19:52

I don't think it's anything like fraudulent.

littlepeas · 01/01/2014 19:55

Aren't you essentially taking the cover out on credit if you pay monthly though? It is the same if you pay your car insurance monthly rather than annually - it's interest.

HermioneWeasley · 01/01/2014 19:56

It's pretty common practice to have one price for an annual premium and another for monthly. You say The annual cheaper option is the default. I don't think the RAC can be held accountable if people can't work out that 12x £8.25 is more than £79.99. My 7 year old could tell you that.

whydidyoudothat · 01/01/2014 19:56

Isn't it the same as if you pay for your car insurance monthly, you are technically taking on a finance agreement. RAC get payed in full, you pay the finance company with interest. I could be wrong though.

RestingActress · 01/01/2014 19:56

Agree it is a credit agreement and you are paying interest on the money borrowed, its not fraudulent

DameDeepRedBetty · 01/01/2014 19:57

Have you looked on Green Flag's website? I think their equivalent cover is considerably less than that - and I've been delighted with them for the past nine years.

verytellytubby · 01/01/2014 19:58

It's not fraudulent.

Indith · 01/01/2014 19:59

Almost all insurance works like that.

meganorks · 01/01/2014 19:59

I don't think its fraudulent but it should be made clear to customers they are paying extra interest as it is with car insurance. Try greenflag though - much cheaper.

Original poster

pinktransit · 01/01/2014 20:04

It's not that the charge itself is fraudulent - and perhaps fraud was too strong a word.
It's more that the price is displayed as a complete amount in one place, and then changes to a monthly cost. There is no like on like comparison, and that feels wrong.
And most people could work out that it will be more if you pay monthly, but 25% is a pretty high cost.

OP posts:

WeAreEternal · 01/01/2014 20:05

I don't see how it can be considered fraudulent at all.
Isn't it completely standard to save a substantially amount by opting to pay a annual payment rather than monthly on anything, telephone line rental springs to mind.

Original poster

pinktransit · 01/01/2014 20:09

I've just looked at Green Flag - on their website, when you opt for monthly payments, it tells you the monthly amount, the total cost payable, and the interest rate. It's upfront and clear, which is as it should be.
I hadn't thought of it as an interest rate before - but when I started buying car insurance and breakdown cover, back in the dark ages, it wasn't actually a credit agreement, so you paid an extra admin charge to cover the cost of collecting 10 or 12 payments, rather than the cost of setting up a finance arrangement.

OP posts:

HermioneWeasley · 01/01/2014 20:10

The increased cost reflects the flexibility of the contract - if you pay up front they've got your money for a year. A lot of people on the monthly plan will cancel a few months in.

bunchoffives · 01/01/2014 20:20

Very underhand when they don't explicitly say there is a charge for paying monthly.

YANBU

mrspremise · 01/01/2014 20:47

Don't go with Green Flag! Yes, it's cheaper, but you will end up waiting for hours for a truck to turn up if you do break down as they are not so good on the coverage. I switched back to the AA for precisely that reason.

BohemianGirl · 01/01/2014 20:51

It's more that the price is displayed as a complete amount in one place, and then changes to a monthly cost

Thats because Gordon Brown, love him and fecking prudence, put a levy on the poor people - if you pay via 12 month DD I think it was 12.5% charge on top. cunt

FredFredGeorge · 01/01/2014 20:57

If you feel the advertising on the site is misleading, complain to them and trading standards, it may be illegal, it certainly sounds unclear.

antsypants · 01/01/2014 22:59

On the payment options when you select monthly payments it advises that there is an additional monthly admin fee when you pay on instalments, there is a little box beside the option that advises you of this, so it is quite easy to find this out, it will be a percentage of the annual total.

So YABU to even insinuate that it is fraudulent or close to fraudulent.

Whether or not the admin fee is justified is a whole different discussion.

MuttonCadet · 01/01/2014 23:01

I'd go with the AA instead, definitely NOT green flag.

lougle · 01/01/2014 23:05

You're funny

They offer a service, you accept or decline. They are offering a discount if you pay up front. If you pay in installments, you pay extra.

TinyDiamond · 01/01/2014 23:11

you are overreacting. Loads of things work like this. Most insurances, gym memberships, subscriptions. Cheaper to pay the year up front.

Mignonette · 01/01/2014 23:16

Of course it is cheaper to pay in a lump sum except that many people cannot afford to do that and are therefore financially penalised.

There are people who do not willfully choose to pay monthly for the sheer fun of it .

The cost should be a median one for both. Fairer that way.

TinyDiamond · 01/01/2014 23:44

Same with TV licence. Of course it works out more, they do it BECAUSE that is how the majority of people pay. Have you really never come across this before?

Littlemisstax · 02/01/2014 11:32

Do you have Tesco vouchers? We've just renewed our RAC for two of us for £40 in vouchers

CrohnicallySick · 02/01/2014 11:40

Mignonette- but then I would be financially penalised for having saved, since the yearly cost would have to go up to meet in the middle, I would end up paying more.

My mum gave me some good advice. I had savings which covered my first year of car insurance (since I was working from age 16, and had 9 months of lessons, I had time to save). My mum told me to put the monthly cost away so that I'd always have enough to buy the next year's insurance in a lump sum. I do the same now for any yearly cost.

With the interest rates on savings so low, there has to be some sort of reward for saving money, otherwise no one would bother and more people would get into financial trouble.

I'm already penalised for having bought my own house (via mortgage) since that means I can't qualify for housing benefit (as that only covers rent). And no, having a mortgage doesn't mean I'm well off as we bought with a 100% mortgage before the crash, our circumstances have changed and we are in negative equity and can't move or sell up.

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