How to Get Very Cheap Car Insurance With No Deposit

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Written by Nick Versaw

Updated August 5, 2022

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 auto insurance” or “no-deposit car insurance” during your search. While this might sound like a good option, don’t be fooled. This kind of very cheap car insurance with no deposit doesn’t really exist.

Let’s dive into no-down-payment car insurance and what it actually means to purchase a policy with zero down payment.

What Is No-Down-Payment Car Insurance? 

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

But in reality, it’s not possible to secure car insurance without paying something up front. 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 insurer wants to risk signing up a driver who might skip out on paying their premium. They may feel that drivers who want very cheap car insurance with no deposit only want to get insurance so they can drive their new car off the lot and then cancel it soon after. That’s why you must 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, there are at least two payment options you have when securing your insurance:

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

Some car insurance providers offer a discount if you pay your premium in full instead of paying a monthly rate over time.

When you pay more than the amount of your first month’s premium, you’re essentially making a “down payment” on the total cost of your insurance premium. This is not an additional insurance cost from the carrier. It’s part of your annual premium and will reduce the amount of money you have to pay throughout the year.

How does that work? If your annual policy costs $900, that breaks down into 12 monthly payments of $75. To activate your auto insurance policy, you must pay at least $75 – your first month’s premium. However, if you pay $175, you’ll have to pay less throughout the year. That additional $100 isn’t a down payment. It just reduces how much you owe on your car insurance premium.

Who Should Get No-Down-Payment Car Insurance? 

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 pay the rest of your premium all at once later on, you might get 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 October 15 and get a fair quote earlier in the month, you’ll need to make the first monthly payment before October 15 to start the policy officially.

If not, you could face a lapse in car insurance, making it harder for you to get the best rates in the future. 

How to Find Very Cheap Car Insurance With No Deposit

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

You’ll want to shop around and get multiple auto insurance quotes to find the most affordable policy. To get an accurate quote, you’ll need to provide some details about yourself and your vehicle:

• Information about your vehicle: You’ll need to share 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 history: A good credit score will help secure cheaper auto insurance coverage in some states.

Everyone needs to pay money upfront to secure insurance, but the cost of an auto insurance policy varies from one driver to the next. Each insurance company uses a combination of factors to calculate your rates. 

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

At Compare.com, we make it easy to compare car insurance quotes side-by-side and find the cheapest car insurance for you. Drivers who use our comparison tool save an average of $720 a year. Get started by entering your ZIP code below:

How to Get a Cheaper Car Insurance Policy

So 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 you can take action 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 can impact 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.

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.

But 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 safe driver, which makes insurance companies see you as a lower risk to insure.

If you already have a clean driving record, you might see savings on your premium compared to high-risk drivers.

Sign Up for Automated Monthly Payments 

Some auto insurance companies offer drivers discounts for enrolling in their automated payment program. You’ll pay 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 other auto insurance discounts you might qualify for. Your insurance company may offer discounts for insuring multiple vehicles at the same address, 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. 

FAQs About No-Down-Payment/No-Deposit Car Insurance 

Can you get car insurance with no down payment?

No, you can’t. Beware of companies who advertise no-deposit car insurance. It’s a clear red flag that it might be a scam, as no reputable 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 providers 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 cheap auto insurance is to shop around and compare rates from multiple insurance companies. Use an online comparison tool like Compare.com to see dozens of quotes in one place.

Shop Around and Compare Auto Insurance Rates

The truth is, very cheap car insurance with no deposit doesn’t exist. If it did, car insurance companies would essentially give you free car insurance that you could cancel as soon as you drove off the lot. However, if you make the most of discounts and payment plans, you’ll be able to get insurance with a relatively low down payment.

When comparing car insurance online, don’t spend hours going to each company’s website to get a quote. Instead, use our auto insurance comparison tool to get free quotes from dozens of companies. Simply enter your ZIP code below to start searching for cheap car insurance.

Nick Versaw Insurance Managing Editor

Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.