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No Down Payment Car Insurance: Zero Money or Low Deposit, Cheap Full Coverage

Joanna Johnson

Car Insurance Expert
Updated: 11/2019

Joanna is an expert on understanding how the different laws and regulations in the car insurance industry shape the way that policies work.

Are you looking for affordable insurance that doesn’t require a down payment to start your policy? A few insurance companies offer this type of vehicle insurance. However, the vehicle owner needing the policy usually has to meet certain criteria, and these types of policies can be extremely difficult to find. Your best chance at finding one of these no down payment policies is to shop around and/or take advantage of online quote tools that provide policy information for multiple large and small insurance agencies.

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Understanding No Down Payment Car Insurance

In order to make getting a car insurance policy more affordable up-front, many drivers look for policies that do not require large up-front down payments. Instead, these drivers simply want to purchase the policy and make their monthly payments so that they can avoid driving illegally or having to utilize coworkers, friends and family or public transit for rides to work and to run errands. Unfortunately, car insurance policies with $0 down payments can be extremely hard to find, especially if you have a spotty insurance history and a less than stellar driving record. This means that it may take you a considerable amount of time to locate these policies, if you can even find them in your area.

Why No Down Payment Car Insurance May Be Difficult to Find

Insurance companies incur fees for each new driver they insure. These fees may include running background and credit checks on the driver and pulling the driver’s driving history from the Bureau of Motor Vehicles. It also covers the cost of underwriting the policy and creating the new account, which are known as administrative fees. In order to offset these initial fees, many car insurance companies require a certain percentage of the total premium as a down payment, and these amounts can range from 10 to 30 percent. It’s rare for an auto insurance company to charge more than 30 percent as a down payment, but it can happen.

For example: Let’s say that you need a full coverage car insurance policy that includes collision, comprehensive and liability insurance for your new car. Your total 6-month premium is $900 and the insurance company is asking for 10 percent up-front. This means that you would have to pay the insurance company $90 before they will activate your new policy.

No Down Payment Car Insurance

Easiest Way to Get No Down Payment Car Insurance

The most common way to get a car insurance policy with no down payment is to sign up for direct deposit with the car insurance company. In this scenario, you either call the insurance agent or sign up online. At the end of the conversation or session, you’ll be asked to provide your debit or credit card information. At that time, the first month of insurance will be withdrawn from your account. For every month thereafter, your car insurance payment will be deducted on the same day, providing your due date isn’t a weekend or a holiday. If it is, you’ll notice the debit to your account the next business day.

If you do choose automatic payments for your car insurance, it’s important to make sure your account has the money to pay the bill by the due date. If your car insurance company cannot deduct the money from your account due to insufficient funds, you could be charged extra fees and/or have your car insurance policy canceled, which means you could end up driving illegally if you realize your monthly car insurance premium was not paid. The good news is that most insurance companies offer a small grace period or they will call you to alert you that you missed your premium payment. The bad news is that you will need to be prepared to pay your car insurance payment immediately upon learning it wasn’t paid. If you are late on too many payments, you could end up categorized as a high-risk driver which will not only raise your rates, it will result in higher future down payments.

How Down Payments Work With Car Insurance

You’re probably familiar with the deposits collected by various utility companies, like electric, gas and phone companies. These deposits are collected in addition to the service charges, meaning even if you provide a $300 down payment to your electric company upon opening your utility account, you’ll still owe your total bill amount when it comes, and it’s up to the discretion of the utility company as to whether you ever get your deposit amount back.

When you hand your car insurance company a deposit, it is deducted from your total 6 or 12-month premium amount.

For example: if your total 6-month premium is $600 and your car insurance company asks for a $100 down payment, the remaining $500 is divided over six months. Meaning you’ll pay around $83 each month for your car insurance. The $100 is not an additional fee on top of your premiums.

The good news is that car insurance companies typically only charge down payments when you first activate your policy. This means that if you switch insurance companies, you’ll probably be charged a down payment, but if you remain with your current insurance agency, you most likely won’t see any additional down payment requirements each time your policy renews.

How to Lower Your Auto Insurance Premium in Order to Lower Your Down Payment

The most important thing you can do to keep your car insurance rates low and your down payment low is to shop around. Different car insurance companies use different metrics for calculating accident-risk and underwriting a new policy. This can result in dramatically different insurance rates, even if the same information is entered. A few items that car insurance companies use to determine your accident-risk include whether or not you are married, your gender, where you park your car at night, where you live and the crime and car theft rates in your area, your driving history, the make, model and age of the car you drive and your credit. However, knowing the metrics doesn’t mean you can lie on your application. If an insurance company catches you falsifying information in order to get lower rates, they will cancel your policy. Instead, you should work on being a safe driver, raising your credit score and potentially moving if you live in a high crime area, which is not only good for your car insurance, it’s also good for the safety of your family.

No Down Payment Car Insurance

Be a Safe Driver

Even if you’ve had a bad driving history in the past, you can change that in the future. In order to lower your premiums, focus on obeying all traffic laws and never drive under the influence. Speeding tickets and being caught driving under the influence can very quickly result in car insurance rates that are triple or even quadruple the amounts you are paying now. Car insurance companies typically check your driving history for the last three years. When they do this, they are looking for anything that says you are a potentially unsafe driver. As you improve your driving and avoid traffic violations, your previous incidents will become less relevant when calculating your rates, and as your premiums reduce, your potential down payment amounts will become less expensive.

Take Advantage of Auto Insurance Discounts

Lowering your total premium amounts by taking advantage of discounts can lower your down payment. Many car insurance companies offer multi-car and multi-line discounts, which result in a certain percentage deducted from the total premium amount. There are also discounts for being a good student, having a car with certain safety features, being over the age of 25 and for taking a defensive driving course.

Only Get the Car Insurance You truly Need

Before you get a car insurance policy, evaluate your car insurance needs. While every driver is required by law to carry liability car insurance, not every driver needs comprehensive and collision insurance.

Liability Insurance – Pays the other drivers expenses related to the car accident (required by law, doesn’t have a deductible)

Comprehensive Insurance – pays for non-driving related damage to your vehicle (may or may not have a deductible)

Collision Insurance – Pays for damage to your vehicle regardless of fault (usually has a deductible)

If you drive an older car or a car that has a low market value, liability insurance may be appropriate for you and your family. If you are still making payments on your car or have a car lease, you’ll probably need all three types of coverage due to the requirements of your financial institution or dealership where you are leasing your car.

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Keep Your Deductibles High But Affordable

Collision insurance most typically contains a deductible amount. Though, some insurance companies offer deductibles as low as zero. Comprehensive insurance typically doesn’t include a deductible, but some car insurance companies may have comprehensive insurance policies that contain deductibles. Liability insurance is least likely to have a deductible. However, if you have deductibles in your policy, you can raise them in order to lower your premiums amounts and potentially your down payment amount. The trick here is to always choose deductible amounts that you can afford. For most drivers, that’s going to be in the $100 to $500 range. This amount is the amount you pay for the repair or replacement of your car. Your auto insurance company pays the remainder of the claim. Since raising your deductible means that you are taking on more financial responsibility, your premiums are likely to be lower.

No Down Payment Car Insurance

Objectively Evaluate Each Potential Claim

It’s true that the more car insurance claims you file, the higher your insurance premiums will rise. In fact, car insurance companies are notorious for raising rates even after your first car accident. In order to prevent this scenario, it’s important to objectively evaluate each potential claim before you file.

For example: if you hit another person or vehicle or damage someone’s property with your vehicle, you’ll have to file a claim with your car insurance company. This is because the damage inflicted involves more than just you, your family and your personal property. However, if you accidentally back out of your garage and rip your side mirror off or hit a pole or object on your property, you may want to pay for those types of damage out of your own personal finances. The reason you can do this is because the incident only affects you, your car and your personal property. By filing fewer claims, you’ll be less likely to experience car insurance rate hikes due to the insurance company deeming you a high-risk driver.

When you are proactive about finding the right insurance company and the right auto insurance policy while taking advantage of discounts and working to improve your driving record, you can find car insurance that is both affordable on a monthly basis and affordable upfront with lower down payments.

FAQ

General Car Insurance Questions

This section will answer your general questions about car insurance and down payments on car insurance.

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Do you have to pay 6 months upfront car insurance?

Not in most cases. Many car insurance companies will let you pay month to month, but you’ll wind up paying more.

Where can I get auto insurance with no money down?

That depends on where you live. We recommend using a car insurance search tool to find no down payment car insurance options in your state.

Can I buy one day car insurance?

In some cases, yes. You’ll need to talk to the insurance company to see if they’re willing to issue you a one-day policy.

What happens if I stop paying my car insurance?

If you stop paying your car insurance, then you’ll lose insurance coverage. That means you won’t be able to legally drive. You’ll also still owe the balance on your insurance bill.

Can you cancel car insurance at any time?

In most cases, yes. However, you may need to have proof of other insurance or proof you no longer own or drive the car to avoid fines from the state.

Do I need to cancel my old car insurance?

That depends on where you live and what company you’re working with. Many insurance companies will cancel your old insurance for you.

What is the down payment on a car insurance quote?

The down payment on a car insurance quote is the amount of money you’ll need to pay upfront to get covered.

Where to get car insurance online with no down payment?

Every state has a different list of insurance companies that operate within the state. You can use an insurance search tool to find out which companies in your state offer no money down car insurance policies.

Can I cancel my car insurance if I paid in full?

In most cases, yes. Depending on your state’s laws and the nature of your policy, you may be entitled to a refund for the unused time on your policy.

Why do car insurance companies charge a down payment?

Car insurance companies need to collect money before they provide insurance because otherwise the company is taking a lot of risk for no reward. This isn’t a sustainable model for insurance companies.

Car Insurance Pricing

We’ll answer the most popular questions about car insurance pricing in this section.

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How much is insurance for a car a month?

That depends on lots of different factors, like the type of car, your driving record, and the state you live in. Nationally, the average cost of car insurance per month is $118.63.

Is it cheaper to pay car insurance monthly?

Almost never. You will usually pay much less overall if you pay for your policy up front instead of in installments.

Is it better to pay car insurance monthly or every 6 months?

That depends on your situation. Most people benefit from paying every 6 months, as that means they spend less money overall on car insurance.

Why is car insurance so expensive?

Car insurance is expensive because the company needs to balance the risk it’s taking by providing insurance with the need to generate a profit.

How much is teenage car insurance per month?

A teen’s monthly car insurance bill depends on lots of other factors, like what kind of car they drive and where they live. Nationally, the average cost for a teen driver is about $140 per month. There is also cheap car insurance for college students who get good grades.

What is the average down payment for car insurance?

On average you can expect to pay between 8 to 33% of your total policy premium as a down payment for coverage.

Do you need a down payment for car insurance?

You’ll need some kind of upfront payment to get any kind of insurance coverage. This may be a down payment or it can take the form of the first month’s payment.

How much down payment for car insurance?

It depends on lots of factors, like your driving record, car, and state. Generally, you should expect a down payment of between 8% to 33% of your total insurance bill.

Do insurance payments go down after a year of driving?

They can, it depends on what happens during that year. If you’re accident and ticket free, then you might be able to get lower rates.

Do you pay insurance down payment plus monthly?

If you pick a monthly payment system, then yes. Usually the down payment will be your first month’s payment.

Which car insurance is cheapest?

That depends on what state you live in and what your specific driving situation is. WE recommend using a car insurance search tool to locate the best deals on car insurance in your state.

Which car insurance company has the lowest down payment?

The company with the lowest down payment will be the one that has the lowest overall rates in your area. You should check local insurance companies to see what kind of rate they’ll offer you to determine who has the lowest down payment.

Which car insurances waive down payment if you get direct?

Most insurance companies will waive any additional down payments or fees if you agree to pay for 6 months of insurance coverage upfront.

How much down payment on commercial auto insurance?

The standard down payment will be between 8% and 33% of the total premium price. Commercial auto insurance costs average $740 to $1,200 per car per year. Keep in mind that high risk driver car insurance will be more expensive.

Should I pay car insurance in full?

If you can afford it, then it’s usually better to pay your car insurance in full. This will usually cost less overall, saving you money.

Does paying a down payment make car insurance cheaper?

In some cases, you can make a larger down payment up front that lowers the monthly cost of your car insurance premium. If your payment is big enough, then it may even lower the total cost of your insurance.

How does the size of my down payment affect the cost of my car insurance?

The bigger the down payment you make on your car insurance, the less you’ll pay each month. If you can pay the whole policy in full up front then most companies offer a substantial discount.

How does my car insurance deductible affect my down payment?

Your car insurance deductible and down payment will be related in the sense that you’ll need a bigger down payment the lower your deductible, as lower deductible policies cost more money.

Car Insurance Payments

This section will answer your questions about paying for car insurance.

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What is an insurance down payment?

An insurance down payment is the first payment you make to activate your insurance coverage. It shows that you will be able to make future payments in exchange for coverage.

Can you get car insurance without a down payment?

Not really. There are can insurance companies that advertise no down payment, but you still need to make a payment before you can get insurance coverage with these companies.

Can you pay a bigger deposit on car insurance?

In almost all cases, yes. Most companies will accept whatever deposit you want to give them, up to the total cost of your policy.

Do you have to pay right away for car insurance?

You’ll have to pay at least something right away for car insurance. This will take the form of a down payment or a first monthly payment.

How often do you pay car insurance?

That depends on your payment agreement with your insurance company. Most people either pay monthly or buy insurance in 6-month intervals.

Can you pay a lump sum off your car insurance?

Yes. You can pay a larger amount upfront to take car of your premium costs for the remainder of your policy period.

Can you pay car insurance in installments?

In most cases, yes. Car insurance companies will generally offer you the option to pay your whole policy at once or pay it in monthly installments.

Can I pay car insurance yearly?

Sometimes. There are companies that will offer yearly policies and accept payment on those policies upfront in full.

Can you get car insurance with no money down?

You can’t get car insurance with no money down. Insurance companies won’t put themselves on the line for tens of thousands of dollars in payouts without getting a payment from you first.

Do I have to pay car insurance upfront?

You’ll need to make a payment before you can get car insurance. That can be the whole amount upfront or a first month’s payment.

Is there a down payment for car insurance?

There’s a first month’s payment, which works the same way as a down payment in that it goes towards lowering the balance you have for your policy’s total premium.

Do you have to pay a deposit on car insurance?

Not in most cases. However, different state laws may entitle insurance companies to request a deposit before providing insurance in some situations.

Where can I get car insurance with no down payment?

You’re not going to be bale to get car insurance with no down payment, your best bet is to find car insurance with the lowest monthly payments so you can get insured and drive legally right away.

Is car insurance first month’s bill the same as a down payment?

You could think of it like that. They’re both the initial payment you make to start your insurance coverage and both of them go towards lowering your overall premium balance for the policy.

Specific Companies and Car Insurance Down Payments

We’ll cover the questions you have about specific companies and car insurance down payments in this section.

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Does Allstate require a down payment?

Allstate requires a payment in order to get coverage. This could be a down payment on an installment plan that is different from monthly payments, or it could be the first month’s payment.

Do you need a car insurance down payment insurance.com?

You’ll need some kind of payment to get car insurance, no matter who your service provider is. This can be called a down payment or a first month’s payment, but no one will give you coverage without receiving some kind of money.

Does State Farm auto insurance charge a down payment?

State Farm doesn’t have a fee that’s labeled as a down payment, but they do require you to pay at least your first month’s payment to start your insurance coverage.

Do you need a down payment with Progressive car insurance?

You’ll need to make a down payment, pay in full, or sign up for a monthly payment plan with Progressive car insurance before you can get coverage.

Other Car Insurance Questions

This section covers questions about car insurance down payments that don’t fit into our other categories.

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Do you get your deposit back if you cancel car insurance?

That depends on why you cancel your insurance. If you cancel through non-payment, then you won’t get your deposit back. Otherwise, it depends on the terms of your agreement with the insurance company.

Does paying car insurance monthly affect credit score?

If your can insurance company reports payments to the credit monitoring agencies, then yes, paying monthly will show as on-time payments on your credit report. Speaking of credit, check out how to get cheap car insurance with bad credit.

Can you get car insurance on the same day?

In most places, yes. However, there are some states that prohibit same-day insurance sales. You’ll need to check your state laws to see what your situation is.

Does car insurance deposit cover first month?

That depends on the company. If it’s truly a deposit, then no, as you will get your deposit back. However, if the company just requires the first month’s payment upfront, then yes, your first month is covered.

Does online car insurance require a down payment?

Yes, can insurance you get online will require either a down payment, payment in full, or a first month’s payment before they’ll provide you with coverage.


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