Car insurance with zero down payment may sound appealing, but it's difficult to find.
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.
It's difficult to find no- or low-down-payment car insurance. Below are some no down payment-required insurance options and other ways to find cheap car insurance.
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.
It’s important to consider that a down payment usually isn’t an additional premium — it’s built into your rate. This means whatever you pay as a down payment will be deducted from future monthly payments.
Below, we have a six-month car insurance premium which costs $600. If you pay $0 upfront, your monthly premium payments going forward will be $100. Some insurance providers will require 30 to 45 days of premium in order to activate your insurance policy.
| Down Payment Amount | Monthly Installments |
|---|---|
| 0% | $100 |
| 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 premium will cost on a monthly payment plan. 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 lump sum 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 car insurance providers will allow you to choose from a range of down payment amounts.
Although you might understand the necessity of remitting 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 provide a precise car insurance quote without a driver's personal information, we used a general profile and discovered USAA was the cheapest car insurance company, with GEICO coming in second, with all other metrics constant.
| Company | Premium |
|---|---|
| Allstate | $1,011 |
| Farmers | $822 |
| GEICO | $602 |
| Liberty Mutual | $863 |
| Nationwide | $714 |
| Progressive | $809 |
| State Farm | $647 |
| USAA | $545 |
Consider, however, that this data doesn't necessarily reflect your unique driving profile. Individual rating factors, such as your vehicle, driving history, and credit score, aren’t represented here. Use this data as a jumping-off point in your search for cheap car insurance, and get free quotes online.
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.
| Increase at 6 Months | Increase at 12 Months | Increase at 3 Years |
|---|---|---|
| +$384 | +$767 | +$2,301 |
The above shows the cost 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.
See more information on when to file a claim.
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 don’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 auto insurance coverage you don't need.
| Coverage Level | Average 6-Month Premium | Monthly Premium |
|---|---|---|
| Liability-only | $360 | $60 |
| $500 deductible | $774 | $129 |
| $1,000 deductible | $686 | $114 |
On average, physical coverage makes up about half of your premium amount. 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 car insurance rates.
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 on your annual premium.
Learn more about popular car insurance discounts.
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.
If you’re looking for more information on car insurance and ways to save, see our other resources:
The auto insurance rates displayed in our articles are based on the results of The Zebra’s comprehensive car insurance pricing analysis. In our analysis of all U.S. 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.
A down payment for auto insurance is what you pay upfront for your policy. This is not an additional premium; your deposit is built into your rate. So the amount you paid for your down payment is deducted from your future monthly premiums.
Not every insurance company requires you to make a down payment or deposit. However, many standard or preferred insurers require that customers put some money down before their policy is active.
Non-standard insurance companies are more likely to require no money down for a policy. To an insurer, a person who can not or will not pay a down payment for a policy is seen as risky to insure. Non-standard companies specialize in insuring high-risk drivers and are more accommodating of customers who can't pay upfront.
It is possible to get full coverage without paying upfront, but this option is less commonly available if you're buying insurance from a major insurance company. Non-standard insurance companies will typically offer full coverage without a down payment, but they may not be as financially stable or have the same level of customer service as a big-name insurer.
