How to Get Very Cheap Car Insurance With No Deposit
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Auto insurance can be expensive, but luckily most people don’t have to pay the entire lump sum up front. Although you can’t technically get a car insurance policy with no down payment, many insurance providers will take the first month’s premium as the down payment. You can then make your normal monthly payments on the rest of the premium, helping you get the coverage you need at the lowest initial price. This guide can help you get the best rate on car insurance with the lowest down payment possible.
Find Cheap Car Insurance with No Down Payment
Is It Possible to Get Car Insurance Without a Deposit?
Unfortunately, getting car insurance without a deposit or down payment is impossible. But most car insurance companies don’t require a separate fee or charge to make a smaller down payment.
When you purchase car insurance and can’t pay the full premium up front, insurers usually take a percentage of the premium as a down payment. It’s typically equal to or less than your premium divided by your policy term — usually six or 12 months.
By getting car insurance with a deposit, you’ll get immediate coverage with less money out of pocket. If you find an insurance company advertising very cheap car insurance with no deposit, they might not be legitimate, and you could end up not being covered when you need it.
Why Do Car Insurance Companies Require a Down Payment?
Car insurance companies require a down payment to activate your policy. Without a down payment, your policy won’t go into effect, and you won’t be covered if you get into an accident or need to file a claim.
Most drivers get car insurance for three reasons, according to the National Association of Insurance Commissioners (NAIC):
- To meet state law requirements
- Their car loan agreement requires it
- For asset protection
With an active car insurance policy, you can protect your assets and meet state or lender requirements. But you must pay some money to secure coverage for an active policy. To keep your policy active, continue making monthly payments or pay the entire premium during the policy period.
Top 5 Tips to Get Very Cheap Car Insurance Without a Deposit
Like most drivers, you’re probably looking for ways to get very cheap car insurance with no deposit. While you have to pay something to activate your policy, getting the best rate can lower your down payment. Here are five tips to get the best cheap auto insurance without sacrificing your needed coverage.
Take advantage of all possible discounts
Taking advantage of as many discounts as possible is a great way to get cheap car insurance. Most discounts are stackable, meaning you can apply them together to maximize savings.
For example, if you’ve taken a defensive driving course, you could get a discount, according to the Insurance Information Institute (Triple-I). Having a teen driver can be expensive, but they could get a better rate if they have good grades or complete a driver safety course.
Here are a few other discounts you may be eligible for:
Keep your driving record clean
Your driving record is just one factor car insurers use to determine your rate. Insurance providers can look back three to five years at tickets and accidents when pricing your policy, according to the NAIC.
Having a clean driving record can get you cheap car insurance and make you eligible for incentives like accident forgiveness. This benefit protects you from a surcharge on your policy after an at-fault accident.
Adjust your coverage levels or deductibles
Consider canceling comprehensive or collision coverage on older, paid-off cars to save on insurance costs. There are also extra coverages, like gap insurance, that you may no longer need on a paid-off car.
Increasing your deductibles can also lower your premium. Going from a $200 deductible to $500 could reduce your comprehensive and collision premium by 30%, according to Triple-I. Just make sure you can afford the higher out-of-pocket cost if you file a claim.
Avoid lapses in coverage
If you have a lapse in coverage, you could pay higher insurance premiums. Insurance providers want to see continuous coverage in your insurance history with no gaps to give you the best rate. Your state could also charge you fines or fees for not meeting the minimum coverage requirements.
Compare quotes often
Shop for car insurance often to compare quotes and get the cheapest car insurance rates. Insurance companies set their own prices, which means you can get a different price from each company for the same coverage. Consider shopping at each renewal or when making a change, like buying a new car or adding a driver.
How Much Does a Car Insurance Down Payment Cost?
Car insurance down payment cost depends on multiple factors, according to Triple-I. These include:
- Your age
- Your gender
- The ZIP code where you garage your vehicle
- How often you drive
- The make and model of your car
- Your credit score
- The coverage types, limits, and deductibles you choose
The average cost of a liability-only policy is about $87 per month, based on the most recent data (2020) from the NAIC. For full coverage, the average cost is $98 per month. The monthly premium is the down payment amount you can expect to make with most insurers.
Keep in mind that these are national averages. Rates can vary significantly by state and ZIP code. The driver’s age, claims history, and driving record are also significant factors in determining car insurance costs.
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How to Lower Your Down Payment
Besides the tips we provided above, there are other ways to lower your down payment:
- Choose an insurance company with the lowest down payment. Most insurers will only require the first month’s premium down. But some insurers may ask for more or less.
- Choose the right coverage. Only selecting the coverage you need can result in a lower premium and down payment. Buying liability-only car insurance is usually cheaper than full coverage, so only buy it if you need the extra coverage.
- Shop for quotes. Comparing quotes for the same coverage can help you find the insurer with the best rate. Then, you can compare down payment amounts to find the cheapest deposit.
- Consider usage-based or pay-per-mile insurance. With usage-based insurance, your driving habits can help you save on car insurance. Pay-per-mile insurance only charges you a base rate plus the miles you drive, which could lower your down payment.
Benefits of No-Deposit Car Insurance
There are advantages to buying no-deposit car insurance. Most importantly, it can make budgeting easier since you’ll have predictable monthly payments.
Many insurance providers, like State Farm and GEICO, offer automatic payments. Instead of paying the bill yourself, you set up an automatic transfer from your bank account, credit card, or debit card. This option may lower your down payment and could let you save on your monthly premium. For example, setting up automatic bill pay through GEICO could save you as much as $36 annually on installment fees.
Although a lump sum can help you save by avoiding monthly billing fees, you don’t have to pay the entire premium if it’s not in your budget. Car insurance companies typically offer flexible payment plans, which means you can pay monthly or quarterly.
Why No-Deposit Car Insurance Might Be a Bad Idea
While it has its perks, getting car insurance with no deposit isn’t the best choice for everyone. Most providers will charge an installment fee, which can vary by company. For instance, GEICO charges up to $3 per month, while Esurance charges about $6 for monthly payments. These fees will increase your total semiannual or annual premium.
Consider liability-only auto insurance if you’re looking for the lowest down payment. A liability-only policy doesn’t offer physical damage coverage for your car like a full-coverage policy does. Adding comprehensive and collision coverages can increase your premium, but you wouldn’t have to pay the entire repair cost or car replacement if you cause an accident.
If you don’t have the money, you could be without a car indefinitely if it’s not drivable after an accident on a liability-only policy. Then, you’d have to pay out of pocket for transportation costs to get to and from work or school. The insurance savings might not be worth it if you can’t afford to fix your car and risk losing your job without reliable transportation.
No-Deposit Auto Insurance FAQs
Although you can’t get auto insurance with no deposit, you can find ways to lower your initial payment. We answered some common questions about getting no-deposit car insurance.
Can you get car insurance with no deposit?
Unfortunately, you can’t get car insurance with no deposit. The deposit, or down payment, activates the policy coverage and is usually a portion of your total semiannual or annual auto insurance rate. Your policy will only take effect once you make a down payment to activate your coverage.
Which auto insurance companies don’t require a down payment?
Auto insurance companies always require some form of down payment to start your policy. The down payment is typically a percentage of your total premium cost and usually a minimum of one month’s premium. Your remaining payments will be lower if you pay a higher down payment.
How do you get cheap full-coverage insurance with no down payment?
The best way to get cheap full-coverage insurance with no down payment is to shop around. Comparing the same coverage types, limits, and deductibles will show which insurance provider has the lowest price. Getting several quotes from different companies can help you get the best rate, which will lower your down payment amount.
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