Finance Literacy

While those who illegally use a mobile phone while on the road will face a fine, such an offence may just be the beginning of their money-related motoring pressures.

This is claimed by AA Insurance, when it indicated that consumers who choose flouting the law by talking on a mobile phone while at the wheel will be stung with a fixed-penalty notice of 60 pounds. Although some people may think that this punishment is sufficient in itself, for those using a mobile phone while driving the financial services firm implied that such drivers will incur higher motor insurance premiums. It was also claimed that drivers who are guilty of using a mobile phone while driving will find that their insurance costs will rise by on average 40 pounds over the course of a year - with increases over the 3-year period that the offence lasts for indicated to be “well over” 100 pounds.

Although rising the annual cost of insurance by 40 pounds is in itself a substantial rise, many drivers could discover that being caught with a mobile while driving may have even more serious financial consequences. Out of a panel of 8 insurance companies, AA pointed out that the providers questioned may increase yearly costs anywhere between 4.2 and 18.1 per cent for those with just 1 mobile offence. One firm, it was also claimed, will refuse to provide cover altogether.

Following on from increased motor insurance costs, it may be possible that drivers come under further pressure to manage other spending constraints related to their vehicle such as petrol and repairs. In turn this could impact upon their capacity to handle other monetary commitments such as personal loans, credit cards and household bills.

Drivers caught driving whilst using a mobile phone could also be charged with careless driving. This offence, it was claimed could lead to a ban. On top of this such consumers could discover that they are refused insurance, with half insurance companies claiming they would not offer them a premium, with the other half charging an extra 50 per cent.

AA insurance director, Simon Douglas, commented: “Driving whilst holding a mobile phone puts you more at risk of being involved in an accident - your reactions are slowed and makes controlling the car more difficult. Insurance companies have adopted a sensible attitude taking such offences seriously. A majority of offenders are unaware of the fact that their insurance will become more expensive, and are hoping that raising the awareness of this premium rise will make people think twice about using their mobile while driving.”

He went to assert that following a road accident police check up on mobile phone records as a part of their routine investigations to see if the device played a role in the event taking place. As a result, when drivers either have to take out cover or renew their policy, Mr Douglas urged them to be completely honest with insurance providers when asked if they have endorsements on their licence. Should this not be the case however, it was reported that they may find their insurance cover is compromised.

When looking to finance the purchase a new car, using a low cost loan could prove to be an efficient way to fund it. By using a cheap loan, borrowers may find that they can but the car of their dreams and have smaller monthly repayments to make. The extra help a loan provides could also help when buying a comprehensive insurance policy. A loan for this purpose is even more useful for those looking to purchase a soft top, after a recent study by Confused revealed that insurance for convertibles is an average of 11 pounds more expensive than it is for other cars.