Can I get auto insurance without a down payment?

The appeal of paying no down payment for car insurance is pretty clear. It seems cheaper, and you can get insured quickly without providing money upfront. However, the reason we don’t like making a down payment is the reason car insurance companies require it. Auto insurers see a client who can’t pay a down payment as someone who is only acquiring auto insurance to drive a vehicle off the lot or register a vehicle, and who might cancel the policy in a short time — i.e., a considerable risk. Thus, it’s highly unlikely you will find no- or low-down-payment car insurance. Still, we evaluated some options and other ways to find cheap car insurance.

Why car insurance with no down payment is impractical
  1. Why do insurance companies use down payments?
  2. How much does a car insurance down payment cost?
  3. How to save: cheapest car insurance companies
  4. Additional resources

Why do insurance companies use down payments?

While a quick Google search will show options for no deposit car insurance, it’s not really a thing. This has to do with the way car insurance companies have designed auto insurance to function. The nature of car coverage — and any form of insurance — is to predict and prepare for risk. An insurance provider's best client is the one that poses the least amount of financial risk.

To an insurer, a client that won’t pay a down payment is one that only wants to secure instant car insurance to avoid registration penalties or to satisfy a car dealership’s requirements. A client like this raises a red flag, as they may cost auto insurance companies more in the long run.

Down payments also help to cover the onboarding costs associated with a new client. An insurer dedicates resources to running your full driving report — not free for car insurance companies — and to other first-time administrative processes that wouldn't be covered by a zero-down payment car insurance policy.

How much are down payments for car insurance?

It’s important to consider that a down payment usually isn’t an additional premium — it’s built into your rate. Meaning, whatever you pay as a down payment will be deducted from future monthly payments.

Below we have a 6-month premium which costs $600. If you pay $0 upfront, your monthly installments going forward will be $100. Some insurance providers will require 30 days to 45 days of premium in order to activate your insurance policy. If your 6-month premium costs $

Down Payment AmountMonthly Installments
10% or $60$90 monthly premium
20% or $120$80 monthly premium
30% or $180$70 monthly premium

The larger the down payment you make upfront, the less your monthly car insurance installments will cost. You shouldn’t think of your down payment as an additional fee or a deposit, but as a part of your premium going forward.

The exact amount you’ll be asked to provide for your down payment may vary according to your payment plan, so it’s hard to give an exact estimate. Some insurers will allow you to choose from a range of down payment amounts.

How to save

Although you might understand the necessity of a down payment, that doesn’t make the financial hardship any easier to bear. So, let’s get into some other ways to save on car insurance, starting with the cheapest car insurance companies.

Which auto insurance company is the cheapest for you?

While it’s hard to provide a precise car insurance quote without a driver's personal information, we used a general profile and discovered Nationwide was the cheapest car insurance company, with all other metrics constant.

Affordable Car Insurance Companies

Liberty Mutual$736
State Farm$748

Consider, however, that this data isn’t reflective of you as a driver. Any unique rating factors, such as your vehicle, driving history, and credit score, aren’t represented here. Use this data as a jumping off point by starting your search for cheap car insurance with Nationwide.

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Be smart with your claims

The phrase, “use it or lose it” doesn't apply to car insurance. In fact, the less you use your auto insurance policy, the cheaper it gets. This is because of the way car insurers assess premiums after you file a claim. While the amount of the increase depends on the value of the claim, your state, and your insurance provider, below are the average expected premium increases over a three-year period.

Average car insurance price increase after at at-fault claim

Increase at 6 monthsIncrease at 12 monthsIncrease at 3 Years

We show the value of the claim over a three-year period, as that’s how long most insurance companies will penalize you for most violations and at-fault accidents.

At times, you'll need to use your car insurance. For example, if you’re at-fault for an accident and the other party does not want to handle things without insurance. In this situation, you're obligated to give your insurance information to the not-at-fault party. Another reason might be if the damage is greater than the premium increase you would receive.This can be difficult to calculate — here are some tips to get started.

  • Get an estimate for the cost of repairs at a mechanic.
  • Use our State of Insurance data to see the average rate increase for your state. Again, consider this staying on your insurance premium for 3 years.
  • If it’s cheaper to pay for the damage out of pocket, do that.

Choose the right coverage

Evaluate your car insurance coverage as your vehicle ages. As time passes, you might be paying for insurance coverage that your vehicle’s age and value doesn’t merit. A general rule of thumb for car insurance: if your vehicle is worth less than $4,000, you probably don’t need collision and comprehensive insurance coverage. These coverages, also known as physical coverage, are designed to protect your vehicle. But if your vehicle isn’t worth much, you might be paying for extraneous insurance coverage.

Average annual car insurance premium by coverage level

Coverage LevelAverage Annual PremiumMonthly Premium
Liability Only$672$56
$500 Deductible$1,427$119
$1,000 Deductible$1,268$106

On average, physical coverage makes up about half of your premium. If, however, your vehicle is worth more than $4,000, consider raising your deductibles. As you can see, if you raise your deductible, you lower your insurance rates.

Look for the right discounts

Most insurance companies follow the same sort of discounts and many times they are automatically added to your policy. But just in case, here are some standard discounts you can qualify for. While they might not make a huge financial impact individually, they can add up to help you save money.

  • Good driver discount
  • Paperless discount
  • Multi-policy discount
  • Payment by bank account
  • Paid in full discount (paying your premium in one payment)
  • Multi-vehicle discount
  • Telematic programs, also known as usage-based insurance.
  • Safety devices

No down payment car insurance: the highlights & additional information

No standard car insurance company will advertise “no deposit auto insurance." In the eyes of an insurer, zero-down payment policies are risky, and attract high-risk drivers. Still, there are other ways to save. While avoiding claims and choosing the right coverage for your vehicle are great ways to start, the best way to find affordable car insurance is to shop as many options as possible. Use The Zebra to compare car insurance policies and find an affordable monthly rate. Get started now to find the cheap auto insurance option that meets your needs.

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Additional resources

If you’re looking for more information on car insurance and ways to save, see our articles here

Method to Our Madness: how we do it

The auto insurance rates displayed in our articles are based on the 2019 results of The Zebra’s comprehensive car insurance pricing analysis. In our analysis of all US zip codes — including Washington D.C. — our user profile consisted of a 30-year-old single male driving a 2013 Honda Accord. To generate pricing specific to particular rating factors, we altered the driving profile based on the common pricing factors utilized by top car insurance companies. These factors include, but are not limited to, credit score, coverage level, and driving record.

National property and casualty losses information is from the Insurance Information Institute and the NOAA National Centers for Environmental Information U.S. Billion-Dollar Weather and Climate Disasters report.