Although appealing, car insurance without a down payment isn't really a thing.
The appeal of not paying a down payment for car insurance is pretty clear. It seems cheaper, and you can get insured fast without having to commit financially. But the same reason you don’t like making a down payment is the same reason car insurance companies use them. Car insurance companies see a client that can’t commit to a down payment as someone who is only acquiring auto insurance to drive a vehicle off the lot or register a vehicle, who will subsequently cancel the policy in short time — i.e., a considerable risk. Thus, it’s highly unlikely you will find no-down payment car insurance. Still, let’s explore some solutions for this problem and some other ways to make car insurance more affordable.
While a quick Google search will show options for no down payment car insurance, it’s not really a thing. This has to do with the way insurance companies have designed car insurance to function. The nature of car insurance — and any form of insurance — is to predict and prepare for risk. An insurance company'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 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 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 insurance companies — and to other first-time administrative processes.
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 payments.
|Down Payment Amount||Monthly Installments|
|10% or $60||$90|
|20% or $120||$80|
|30% or $180||$70|
The above chart illustrates that the larger down payment you have, the less your future 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 pay for your down payment may vary, so it’s hard to give an exact estimate. Some insurers will give allow you to choose from a range of down payment amounts.
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.
While it’s hard to give an exact car insurance quote as a blanket average, we did our best. Using a profile outlined here, we discovered that Nationwide was the cheapest car insurance company, with all other metrics constant.
Cheap Car Insurance Quotes
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 but not finishing your search for cheap car insurance with Nationwide.
The phrase, “use it or lose it” could not apply less to car insurance. In fact, the less you use your car insurance, the cheaper it will be. This is because of the way car insurance companies will charge you after filing a claim. I.e., they’ll raise your premium quite a bit. While the amount of that increase will depend on the value of the claim, your state, and your insurance company, below are average expected premium increases over a 3-year period.
Average Increase After at At-Fault Claim
|Increase at 6 months||Increase at 12 months||Increase at 3 Years|
We show the value of the claim over a 3-year period, as that’s how long most insurance companies will continue to charge for most violations and at-fault accidents.
There will be times when you don’t have a choice but 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. Here, you’re obligated to give your insurance information to the not-at-fault part. Another reason might be if the damage is greater than the premium increase you would receive. Because this can be difficult to calculate, we created a handy breakdown.
Evaluate your insurance coverage as your car ages. Meaning, you might be paying for insurance coverage that your vehicle’s age and worth doesn’t merit. A general rule of insurance is if your vehicle is worth less than $4,000, you probably don’t need your 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 insurance coverage you don’t need.
Average Annual Premium by Coverage Level
|Coverage Level||Average Annual Premium||Monthly Premium|
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 premium.
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.
No standard car insurance company will advertise a “no down payment” policy. In their eyes, they’re 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 car insurance options as possible. Only with The Zebra can you compare hundreds of insurance companies at once to see if you could be getting a better rate elsewhere. Get started now.
If you’re looking for more information on car insurance and ways to save, see our articles here
Between September and December 2017, The Zebra conducted comprehensive auto insurance pricing analysis using its proprietary quote engine, comprising data from insurance rating platforms and public rate filings. The Zebra examined nearly 53 million rates to explore trends for specific auto insurance rating factors across all United States zip codes, averaged by state, including Washington, DC.
Analysis used a consistent base profile for the insured driver: a 30-year-old single male driving a 2013 Honda Accord EX with a good driving history and coverage limits of $50,000 bodily injury liability per person/$100,000 bodily injury liability per accident/$50,000 property damage liability per accident with a $500 deductible for comprehensive and collision. For coverage level data, optional coverage (that must be rejected in writing) is included where applicable, including uninsured motorist coverage and personal injury protection.
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.
For vehicle make and model data, analysis referenced the most popular vehicles in the U.S. by 2016 year-end sales according to Goodcarbadcar.net’s automakers’ data.
Finally, some rate data may vary slightly throughout report based on rounding.
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