Cheap Car Insurance with No Deposit
How to get cheap car insurance with no deposit
Put simply, you won't be able to get car insurance with no money upfront. The reason for this is simple: car insurance companies won't take on the risk of insuring a driver who hasn't started paying their premiums. Still, your down payment — or deposit as it's sometimes called — is typically included in your monthly payments. The cheaper your monthly payments, the cheaper your down payment will be.
Read on to find out why insurance deposits are required and to see the best car insurance companies for drivers looking for low monthly payments.
Key takeaways
- Zero-down car insurance is not offered by insurers
- While some insurers may call it a "deposit," your initial payment is actually just applied to your overall premium
- Your first payment is often larger to cover onboarding costs insurers face
- The cheaper your policy, the cheaper your down payment will be
How to get low down payment auto insurance
The down payment for your auto insurance is typically just your first month's payment. This means getting a "low down payment" or low deposit car insurance is contingent upon getting a good rate from your insurer. Essentially, the only choice that you might have in lowering your down payment will depend on whether your insurer offers a choice between paying for the first 30 days or the first 45 days of your policy. Clearly, paying for only 30 days will be the cheaper option.
In short, it's not possible to find no down payment car insurance.
Why do car insurance companies require down payments?
While a quick Google search will show options for no deposit car insurance, it’s not really an option. This has to do with the way auto insurance functions. Car insurance coverage — and any form of insurance — is designed to predict and prepare for risk. An insurance provider's best client is the one that poses the least amount of financial risk.
Auto insurers see a driver who can’t pay a down payment as someone who is only acquiring auto insurance to drive a vehicle off the lot or get their vehicle registered. Those people may only want to secure instant car insurance to avoid registration penalties or to satisfy a car dealership’s requirements. A customer like this raises a red flag to insurance companies, as they may cost them more in the long run. Furthermore, an insurer might worry that such clients would simply cancel the policy after a short time, posing a considerable risk.
Why is my first car insurance payment more expensive?
Your initial down payment or deposit helps to cover the onboarding costs associated with a new client. An insurer dedicates resources to running your full driving report — not free for car insurance companies — and to other first-time administrative processes that wouldn't be covered by a zero-down payment car insurance policy. While they may be referred to as a "deposit," customers typically won't ultimately get this money back as it is applied to the overall premium.
How much does a car insurance down payment cost?
It’s important to remember a down payment usually isn’t an additional premium — it’s built into your rate. This means whatever you pay as a down payment will be deducted from future monthly payments.
For example, say a six-month car insurance policy costs $600. If you paid $0 upfront, your monthly premium payments going forward would be $100. Some insurance providers will require 30 to 45 days of premium in order to activate your insurance policy.
The larger the down payment you make upfront, the less your premium will cost on a monthly payment plan. You shouldn’t think of your down payment as an additional fee or a deposit, but as a part of your premium going forward.
The exact lump sum you’ll be asked to provide for your down payment may vary according to your payment plan, so it’s hard to give an exact estimate. Some car insurance providers will allow you to choose from a range of down payment amounts.
How to save money on auto insurance
Although you might understand the necessity of remitting a down payment, that doesn’t make the financial hardship any easier to bear. So, let’s get into some other ways to save on car insurance, starting with the cheapest car insurance companies.
1. Find the cheapest auto insurance company for you
2. File claims wisely
.The phrase, “use it or lose it” doesn't apply to car insurance. In fact, the less you use your auto insurance policy, the cheaper it gets.
This is because of the way car insurers assess premiums after you file a claim. While the amount of the increase depends on the value of the claim, your state and your insurance provider, below are the average total premium costs over a three-year period.
At times, you'll need to use your car insurance — for example, you’re at fault in a collision and the other party does not want to handle things without insurance. In this situation, you're obligated to give your insurance information to the not-at-fault party.
Another reason might be if the damage is greater than the premium increase you would receive.
3. Choose the correct coverage
4. Find insurance discounts
Most insurance companies offer similar discount and many times they are automatically added to your policy. But just in case, here are some standard discounts you can qualify for. While they might not make a huge financial impact individually, they can add up to help you save money on your annual premium.
No down payment car insurance: highlights and additional information
No standard car insurance company will advertise “no deposit auto insurance." In the eyes of an insurer, zero-down payment policies are risky and attract high-risk drivers. Still, there are other ways to save. While avoiding claims and choosing the right coverage for your vehicle are great ways to start, the best way to find affordable car insurance is to shop as many options as possible.
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