Can I get Car Insurance without a Down Payment?

Can you get car insurance with no down payment?

If you’re currently in the market for new car insurance, chances are you’re hoping to save some cash on your policy. After all, with all the different insurers, at least one should have the rates you’re looking for. Right?

Looking for ways to save on car insurance has many drivers turning to the idea of no-deposit car insurance. While insurance companies don’t commonly use this term, it refers to car insurance policies that don’t require a deposit when you sign up for coverage. The amount of money you’ll need to pay to begin your car insurance policy varies on several factors, so be sure to compare multiple companies to get the best rate. 

Is No-Deposit Car Insurance Right for You?

No-deposit car insurance is right for you if you’re looking to save some money while beginning your new car insurance policy. You might need car insurance without being in a financial place to put a large amount of money down.  Some companies advertise no-deposit car insurance, but don’t let this fool you. 

Most reputable companies will not allow you to begin your insurance policy without putting any money down. Those that do aren’t too keen on advertising it. Insurance companies don’t want to deal with high-risk drivers simply looking to secure an insurance plan to drive their car off the lot. Drivers who aren’t willing to make a down payment on insurance fall into that category, making them less desirable to insurers. 

For insurance companies, the term “no deposit” means that you’ll only be required to pay for the first month of car insurance to be able to start your policy and secure insurance coverage. 

How No-Money-Down or No-Deposit Car Insurance Works

Contrary to what you might think, no-deposit car insurance isn’t a special deal or hack to getting free insurance. When you sign up for monthly installments, you’ll follow the traditional process of receiving an insurance quote. 

After you provide them with the necessary information about your vehicle and driving history, you’ll be given a quote. Your insurer will then give you the following information:

  • Cost of first payment/deposit 
  • Subsequent monthly payments 
  • Total premium cost 

Once you’ve received your quote, you can purchase your car insurance by completing the first payment. 

Is There a Catch?

Insurance companies who waive the deposit fee and use your first month’s payment as your down payment may seem like they’re giving you a great deal, but the numbers may surprise you. Insurers often use this as a chance to increase your monthly premiums since you didn’t put down a deposit. 

For example, let’s say that your current insurer quotes you $500 for your yearly car insurance rate if paid in full. Or, they offer you the chance to have no deposit rates of $55 a month. Sounds great, right?

In actuality, paying $55 month-to-month will end up costing you $660 by the time the year is up. This amount is $160 more than the yearly rate if you paid it all up front. 

Although a cheaper payment upfront may be easier financially, this ends up being more expensive over the course of the entire policy.

Unfortunately, there’s no set price for how much your car insurance deposit will cost you. The amount you’ll pay to begin coverage is based on similar factors used to determine your car insurance rates

Factors such as your neighborhood, driving history, age, gender, and even your credit score are all considered to provide you with a final deposit cost. However, low-risk drivers with a clean driving history will likely have a lower deposit amount and insurance rates.

States that have No Down Payment Auto Insurance Policies

There are only a few states that offer no down payment auto insurance to their residents.

The states with no deposit auto insurance are:

If you don’t live in one of these states, it looks like no down payment insurance isn’t in your future right now. If you do, you’ll have to find a company willing to offer you this option. Keep in mind that these companies are often few and far between, with much higher rates than other traditional insurance policies.

Be wary of companies that offer to give you your first month for free, even if you haven’t put any money down. This is an uncommon practice, and, most likely, no trustworthy company would offer to do so. 

Why do Insurance Companies Require a Down Payment?

While a down payment is standard in the world of car insurance, many drivers are less than enthusiastic about having to fork over a down payment in addition to their monthly payments.  

Your auto insurance policy won’t start until you’ve made a down payment, and if you get in a collision during this time, your insurer won’t cover you. If you can afford to pay the entire premium upfront, you’ll end up saving money during the year by avoiding pesky installment fees. 

Which Companies Offer Car Insurance with No Down Payment?

Here are a few companies that offer car insurance with no down payment:

No two insurance companies will give you the exact same quote, so take your time comparing rates. Shopping around is the best way to ensure that you get the most bang for your buck when it comes to your insurance policy.

Alternatives to No Down Payment Auto Insurance

Whether or not no-down-payment auto insurance is offered in your state, one of the best ways to find the cheapest insurance rates is to compare quotes from as many companies as possible. offers drivers an easy way to compare quotes from multiple insurance companies in your state. When you see quotes that are cheap and fit your lifestyle, you’ll know exactly where to go to find affordable coverage for your vehicle.

Why You Should Consider Making a Down Payment

Even though a down payment may initially seem like you’re taking a massive chunk of money from your bank account, it can benefit you in the long run. 

We get it; paying for your premium in installments is less financial pressure on you. However, the down payment you make at the start of the policy is built into your rate, and you no longer have to pay it on your monthly premium. You’ll have saved money by the time the end of your policy rolls around, and you can use it for something much more exciting than car insurance. 

What to Look For When Shopping for Low-Cost Car Insurance

When shopping for low-cost car insurance, look for insurance companies that offer drivers plenty of discounts, as this is one of the best ways to save money on your premiums. 

Do I Qualify For A Car Insurance Discount?

Every car insurance company offers discounts to its drivers, but they aren’t always obvious. You may need to do a little digging and ask your agent about any discounts you are entitled to.  

Here are a few car insurance discounts you may qualify for:

  • Multi-Policy: Insuring more than one vehicle on the same insurance policy is a simple way to save. You’ll save around 25% on your premiums when compared with insuring them separately.
  • Vehicle Safety: If your vehicle came with additional safety features involved, you might qualify for the vehicle safety discount. While it might not be much, it never hurts to ask your insurer if you are eligible. Features required for you to qualify for this discount depend on the insurer, but it generally includes safety features such as anti-lock brakes and airbags. 
  • Good Driving: Having a good driving record can save you money on your car insurance premium. Insurers will look at your driving record to see if you’ve been accident and ticket-free for more than three years. If so, you can qualify for a good driving discount that ranges anywhere from 10% – 40%. They may also install a telematics program in your car that tracks your driving habits. If your driving meets the standards, you can qualify for a discount of up to 30%. 
  • Usage-Based Discounts: If your car spends more time in the garage or in the driveway than on the highway, you may qualify for a usage-based discount. This discount is verified by a tracker device that monitors your miles driven. You’ll pay a low monthly base rate, and additional costs are added depending on the miles driven each month. 

Tips to Save More on Your Car Insurance

Is there such a thing as saving too much money? We don’t think so. Here are a few more tips you can implement to save even more on your car insurance.

Raise Your Deductible

Adjusting your deductible for your car insurance policy can directly impact the cost of your car insurance. Your deductible is the amount of money that you, as the policyholder, agree to pay out of pocket before your insurance company kicks in to cover the rest. 

Deductibles typically start at $200 and can go as high as $2,500. The most common deductibles range from $500 to – $1,000, depending on your financial stability. 

Generally, the lower your deductible, the higher your car insurance rates will be. The higher your deductible, the lower your monthly premium will cost you. 

When you raise your deductible, you’re choosing to accept more risk for your policy. Once submitted, your insurance company shoulders less responsibility should you file a claim. 

Increasing your deductible can result in you saving up to 40% on your premiums. However, this could come back to bite you if you need to file a loss. 

While you always want to choose a deductible level that you can afford, raising your deductible level is a quick way to see savings. Remember that possible savings differ between companies, so compare quotes with different deductible levels before making a final decision. 

Consider Driving a More Affordable Vehicle

In some cases, your car could be the culprit of your high insurance rates. While it’s not possible for every driver to immediately make the swap, driving a more affordable vehicle will help you save on your car insurance. 

As a general rule of thumb, minivans and small SUVs are cheaper to insure than flashy, luxury sedans. If you’re currently car shopping, take time to compare car insurance rates for the makes and models you are interested in. 

Bundle Your Home and Auto Insurance Policies

If you own or rent a home, bundling your home and auto insurance policies is a strategic way to save money on insurance. Keep in mind, though, that you need to do more than just check the online box for multi-policy insurance. 

Ask your company for any bundling discounts, and check the rates of other companies as well. For example, Allstate offers a 10% car insurance discount and 25% homeowners insurance discount should you bundle them together. Comparing rates is essential since discounts and prices vary. While your current insurer may offer you a 15% discount for bundling, if the rates are high, you won’t end up saving much. 

Compare Rates from Multiple Companies

The best way to ensure that you’re getting the best possible car insurance rates is to get out there and compare rates for yourself. Despite what their ads and catchy slogans may say, there isn’t one company with the cheapest rates for all. Car insurance companies base their rates on several factors, meaning that they can differ widely from driver to driver. 

Although you want to compare multiple companies’ rates, this doesn’t mean you need to spend hours online with 50 tabs open. Insurance comparison websites like have done the legwork for you. All you need to do is answer some questions about you, your driving record, and your vehicle, and you’ll be well on your way to seeing which insurance rates are the best for your budget. 

What If You Can’t Afford Car Insurance?

If you can’t afford your current car insurance, this doesn’t mean that it’s time to sell your vehicle or drive without insurance. Do your best with what you have, and choose the coverage that fits your vehicle, lifestyle, and wallet. 

Choose the Best Coverage You Can Afford

Depending on the type of vehicle you drive, you may be able to skirt by with the minimum amounts of coverage for your state.  For instance, if you drive a financed car, your lender will require you to carry comprehensive, collision and liability insurance. If your vehicle is older or already paid off, you can drop the additional coverage and stick with liability insurance for the time being. 

Frequently Asked Questions

Is a down payment required for car insurance?

A down payment is typically required to activate your car insurance, but this isn’t the case if you plan on paying for your insurance premium upfront. On average, this down payment is the cost of one to two months of your car insurance premium. 

How does a car insurance deposit work?

Your car insurance deposit is an amount you put down to kickstart your policy coverage. This amount is typically one to two months of your monthly premium or 20-30% of the policy’s total price.

Can I get my down payment back on car insurance?

If you cancel your car insurance policy before your next installment is due, you should be able to get a portion of it returned to you. While there may be a fee to cancel your car insurance, it’s typically only a few dollars or a percentage of the balance owed on the total rate. 

How do I get car insurance if I can’t afford it?

If you can’t afford your current car insurance, shop around and get different rates. You can also try to find a more affordable vehicle that is cheaper to insure and make sure you receive all possible discounts from your current insurance company. It may also help to take a look at your budget to see where you can cut back. Although you may need to go the extra mile to afford car insurance, driving without insurance is never a good idea, and lapses in coverage can cost you big time in the long run. 

What happens if you get into a car accident without insurance?

The consequences of a car accident without insurance vary depending on three factors: (1) where you live, (2) the amount of damage caused, and (3) who was at fault. Only two states allow drivers to opt-out of carrying car insurance: New Hampshire and Virginia

However, Virginia requires drivers to pay $500 to the Department of Motor Vehicles to drive uninsured. In both states, you’re financially responsible for any damages to property or injury you cause. If you’re the at-fault driver, you’ll need to pay out of pocket for any damage or injuries you caused, and the other driver holds the right to sue you. You may also need to report the accident to your state’s DMV, which could result in license suspension or other consequences.  

If the other driver is at fault, you can file a third-party claim with their insurance, and that should cover the extent of damage or injuries caused. If you live in a state that does require car insurance, being involved in an accident would not only result in you paying for damages out of pocket, but you could face license revocation, fines, and even jail time.

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