Can I Get Car Insurance Without a Down Payment?

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by Nick Versaw Updated April 28, 2022

Can you get car insurance with no down payment?

Your Guide to Getting No Down Payment Car Insurance

When you’re shopping for car insurance, the last thing you want is to get hit with a hefty initial car insurance bill. So when shopping for cheap car insurance, you might gravitate towards companies that allow drivers to sign up without making an initial payment. 

You may come across “no-down-payment” or “no deposit” car insurance during your search. While this might sound like a good option, don’t be fooled. This kind of auto insurance policy doesn’t really exist. Let’s dive into no down payment car insurance and what it really means. 

What is No Down Payment Car Insurance? 

“No-down-payment” car insurance is an insurance policy that lets you activate your coverage without making an initial payment. 

But in reality it’s not possible to secure car insurance without paying something. Insurance companies might say there’s no down payment, but you’ll still need to pay for your first month of auto insurance for your policy to be active. 

No major insurer wants to risk insuring a driver who might skip out on paying their premium. They feel that drivers who want insurance with no down payment only want insurance to drive their new car off the lot and plan to cancel soon after. That’s why you have to make an initial payment before your insurance is active. 

How Does No Down Payment Car Insurance work? 

While no down payment car insurance isn’t really a thing, here are the two payment options you have when securing your insurance. 

Typically, car insurance companies will offer you two payment options:

  • Monthly payments: You pay for your yearly insurance costs in monthly installments spread out over 12 months. 
  • Lump-sum payments: You make larger lump sum payments of three months, six months, or twelve months at one time.

Some auto insurance companies offer a discount when you pay your premium in full. When you pay more than the initial amount of your first month’s premium, you are essentially making a “down payment” on the total cost of your insurance premium. However, remember this amount is not an additional insurance cost from the carrier. It’s part of your annual premium and will lower how much you have to pay throughout the year. 

Imagine your annual policy costs $900. This would break down into monthly payments of $75. To keep your auto insurance policy in effect, you need to pay at least $75 to activate your policy.  However, if you pay $175, you’ll have to pay less throughout the year. That additional $100 you pay isn’t really a down payment, it just reduces how much you owe on your premium. 

Who is No Down Payment Car Insurance Good For? 

young woman smiling while driving in car

You will always need to put some money down to secure car insurance. If you can’t pay your entire premium upfront, the only other option is to make monthly payments.  Making monthly payments is an excellent way to keep your coverage affordable. If you choose to in the future, you can pay your premium all at once and you just might snag a small discount from your insurance company for making a lump sum payment

It’s important to remember that no matter what, you must make an initial payment to kickstart your auto insurance coverage. If you need insurance by Oct 15 and get a favorable quote earlier in the month, you’ll need to make the first monthly payment before Oct 15 to start the policy officially. 

If not, you could face a lapse in car insurance, making it difficult to get affordable coverage in the future. 

How to Find a No Down Payment Car Insurance Policy?

Since you can’t find a no down payment car insurance policy, the next best thing is to find a policy that comes with a low monthly premium. 

In order to find the most affordable policy you want to shop around and get several premium quotes. To get an accurate quote, you’ll need to provide with some basic information about yourself:

  • Information about your vehicle: Include the make, model, year, color, license plate, and mileage. 
  • Personal information: This should include your age, gender, yearly mileage, driving history, zip code, marital status, and name. 
  • Your credit score: A good credit score will help you secure cheaper auto insurance coverage in most states.

Since everyone needs to pay money upfront to secure insurance, the cost of an auto insurance policy varies between drivers. Each insurance company uses a combination of the information listed above to calculate your rates. 

An online quote will typically show you how much you’ll pay yearly and the cost of your first monthly payment. 

At Compare.com we make getting an affordable quote easy. Drivers who use our auto insurance comparison tool save an average of $720/year. The best part about it, the process only takes 5 minutes. 

Get started by entering your zip code below. 

How to Get a Cheaper Car Insurance Policy

woman saving on her auto insurance

By now you know there’s no such thing as no down payment car insurance – but there’s always a chance you can find a cheaper rate than what you’re currently paying.  Insurance costs will always vary between companies, but there are some things you can do to get a cheaper car insurance policy: 

Regularly Evaluate Coverage Levels 

The more coverage you have, the more you can expect to pay for your premium. You can save money on your insurance policy by regularly evaluating coverage levels. For example, if you drive an older car, you might find it cost-effective to drop coverage like collision and comprehensive and opt for the state minimum levels of insurance. 

Improve Your Credit Score 

In many states, your credit score directly impacts your auto insurance premium. Insurance companies reward drivers with good credit with more affordable rates, while drivers with low credit scores often have to fork out a bit more. This is because insurers view those with good credit scores as a lower risk than drivers with poor credit. To find more affordable car insurance work on improving your credit score. 

Think Before Filing a Claim

To keep auto insurance costs low, always think before filing a claim. Drivers who don’t file many claims will generally enjoy lower insurance rates. 

Of course, there may be times when you need to use your insurance, like in an at-fault collision where you need to provide insurance to the other party. If you’ve damaged your car on your own, it might be better to get a quote for the damage from a mechanic and pay for the repairs yourself. 

Complete a Defensive Driving Course  

Completing a defensive driving course can help you qualify for additional savings on your auto insurance premium. These state-approved classes teach you to be a safer driver which makes insurance companies see you as a lower risk to insure. As a result, you might see some savings on your premium. 

Sign Up for Automated Monthly Payments 

Some auto insurance companies offer drivers a discount for enrolling in their automated payment program. You’ll pay for your premium in monthly installments, and they’ll deduct this from your bank account or credit card automatically. 

Ask Your Insurer for Discounts 

Ask your insurance agent about any auto insurance discounts you might qualify for. Your insurance company may offer discounts based on your grades if you’re in school, ensuring multiple vehicles, bundling your policies, or paying your insurance premium in full. Here is a brief list of discounts you could qualify for:

  • Multi-vehicle discount 
  • Good student discount 
  • Paid-in-full discount 
  • Paperless discount 
  • Usage-based discount (pay-per-mile)
  • Good driver discount 

Think About Raising Your Deductible 

Raising your deductible can lower your monthly payments. Keep in mind that you should only do this if you can afford to pay the deductible if you have to file a claim. If you raise your deductible from $500 to $1,000 but can’t afford to pay for it, you’ll be unable to receive help from your insurance company when you need it. 

Shop Around and Compare Auto Insurance Rates

As we mentioned previously, you want to compare auto insurance rates to find the best policy for you. When comparing car insurance companies online, don’t spend hours going to each individual company to get a rate. Instead, use our auto insurance comparison tool to get quotes from dozens of companies. Simply enter your zip code down below to get started on your search for cheap car insurance. 

FAQs about No Down Payment/No Deposit Car Insurance 

Can you get car insurance with no down payment?

No, you can’t. Beware of fraudulent companies who advertise no deposit car insurance, as no reputable insurance company provides this option. 

Does auto insurance require a down payment?

Auto insurance requires you to make an initial payment to activate your coverage. 

Why do insurance companies ask drivers to make a down payment? 

Insurance drivers require drivers to make a payment to avoid risky investments. If you haven’t made any payments, you’re viewed as too risky to insure. Drivers who can’t commit to making an initial payment could cancel the policy shortly after it begins, and insurance companies don’t want to take the chance. 

How can I find affordable car insurance? 

If you’re working with a tight budget, one of the best ways to find affordable car insurance is to shop around and compare rates between insurance companies. Use an online comparison tool like Compare.com to see dozens of quotes in one place.

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