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How to get cheap car insurance with no deposit

Put simply, you won't be able to get car insurance with no money upfront. The reason for this is simple: car insurance companies won't take on the risk of insuring a driver who hasn't started paying their premiums. Still, your down payment — or deposit as it's sometimes called — is typically included in your monthly payments. The cheaper your monthly payments, the cheaper your down payment will be

Read on to find out why insurance deposits are required and to see the best car insurance companies for drivers looking for low monthly payments.

Key takeaways

  • Zero-down car insurance is not offered by insurers
  • While some insurers may call it a "deposit," your initial payment is actually just applied to your overall premium
  • Your first payment is often larger to cover onboarding costs insurers face
  • The cheaper your policy, the cheaper your down payment will be

How to get low down payment auto insurance

The down payment for your auto insurance is typically just your first month's payment. This means getting a "low down payment" or low deposit car insurance is contingent upon getting a good rate from your insurer. Essentially, the only choice that you might have in lowering your down payment will depend on whether your insurer offers a choice between paying for the first 30 days or the first 45 days of your policy.

A higher down payment upfront will result in lower monthly payments, as more of your overall premium has been paid at the onset of the policy. All companies have a variety of plans for you to select, but remember that there may be service fees that accompany certain payment methods. For instance, some companies will accept debit/credit cards or Electronic Funds Transfers in order to avoid these fees. It's always a good idea to inquire about these plans with your insurer to find the best payment method possible. 

In short, it's not possible to find no down payment car insurance.


It's not possible to find no-down-payment car insurance, but with qualifying discounts, you can find an affordable rate with the right car insurance provider.


Why do car insurance companies require down payments?

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

Auto insurers see a driver who can’t pay a down payment as someone who is only acquiring auto insurance to drive a vehicle off the lot or get their vehicle registered. Those people may only want to secure instant car insurance to avoid registration penalties or to satisfy a car dealership’s requirements. A customer like this raises a red flag to insurance companies, as they may cost them more in the long run. Furthermore, an insurer might worry that such clients would simply cancel the policy after a short time, posing a considerable risk. Some states have provisions that require insurers to report when a registered driver cancels their policy for any reason, which could lead to trouble down the line. 

Why is my first car insurance payment more expensive?

Your initial down payment helps to cover the onboarding costs associated with a new client. Insurers dedicate 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. The initial larger payment also gives the carriers ample time to notify you should they decide to cancel your policy.


How much does a car insurance down payment cost?

It’s important to remember 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.

For example, say a six-month car insurance policy costs $600. If you paid $0 upfront, your monthly premium payments going forward would 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.


How to save money on auto insurance

Although you might understand the necessity of remitting a down payment, that doesn’t make the financial hardship any easier to bear. Note: remember that "cheap" car insurance is rarely the best for you. You should aim for the best coverage at the best value. Also, if you are financing your vehicle, your lender can require physical damage coverage that is certainly going to lead to higher rates. That said, let’s get into some other ways to save on car insurance, starting with the cheapest car insurance companies. 

 

1. Find the cheapest auto insurance company for you

While it’s hard to provide a precise car insurance quote without a driver's personal information, we discovered USAA was the cheapest car insurance company for both full coverage and minimum liability-only, with all other metrics constant. Remember that USAA is limited to members of the military community and their families. Also, we at The Zebra do not recommend obtaining just the bare minimum liability coverage, as it leaves you at risk for loss. Higher coverage limits keep you better protected. 

Full Coverage Auto Insurance Rates
Company Avg. 6 Mo. Premium Avg. Monthly Premium
USAA $683 $114
Nationwide $738 $123
GEICO $771 $129
State Farm $785 $131
Farmers $893 $149
Progressive $941 $157
Allstate $1,206 $201
Updated: 01/26/23.
Liability-Only Auto Insurance Rates
Company Avg. 6 Mo. Premium Avg. Monthly Premium
USAA $217 $36
GEICO $226 $38
State Farm $291 $49
Nationwide $301 $50
Progressive $346 $58
Farmers $359 $60
Allstate $364 $61
Updated: 01/26/23.

Dynamic auto insurance data methodology

Methodology: The auto insurance rates displayed above and throughout this page are dynamic, meaning the data will refresh when the most recent information is made available. Rates are based on a sample driver profile — a 30-year-old single male driver with a Honda Accord and full coverage. This profile was adjusted based on common pricing factors used by major car insurance companies, like age, coverage level, driving record and others.

2. File claims wisely

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 total premium costs over a three-year period.

For this reason, it's considered wise to pay for small claims out of your own pocket to avoid substantial rate increases. 

At times, you'll need to use your car insurance — for example, if you’re at fault in a collision, you are required to file a police report with proof of coverage. In this situation, you're obligated to give your insurance information to the not-at-fault party. This documentation can help protect you against unrealistic claims that might appear.

Another reason might be if the damage is greater than the premium increase you would receive.

Should you file an auto claim?

Here are some tips to help you calculate whether to file a claim or not:

  • Get an estimate for the cost of repairs at a mechanic
  • Use our car insurance claims calculator to help determine if the associated costs make it worth filing a claim
  • If it’s cheaper to pay for the damage out-of-pocket, do that
EXCESS PREMIUM COST AFTER A CLAIM
Increase at 6 Months Increase at 12 Months Increase at 3 Years
+$384 +$767 +$2,301

The above shows the total cumulative cost in excess car insurance premium over a three-year period, as that’s how long most insurance companies will penalize you for most violations and at-fault accidents.

 

3. Choose the correct 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 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 coverage options, 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 Avg. 6 Mo. Premium Avg. Monthly Premium
State Minimum Liability Only $298 $50
50/100/50 BI/PD with $1,000 Deductible $777 $129
50/100/50 BI/PD with $500 Deductible $880 $147
Updated: 01/26/23.

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. Comprehensive coverage — also known as other-than-collision coverage — is also worth considering on its own if full coverage is too costly. Comprehensive is often less expensive than collision and covers against perils such as fire, flood, theft, or animal collisions. 

 

4. Find insurance discounts

Most insurance companies offer similar 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.

Compare auto insurance quotes and find the policy that fits you.

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No down payment car insurance: highlights and 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. 


Auto insurance with no down payment — FAQs

It's unlikely. Paying upfront for car insurance is almost always required, even if it is just the first month's premium.

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.

Non-standard insurance companies are more likely to require no money down for a policy, but that is not guaranteed. 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 might be more accommodating of customers who can't pay much upfront.

While a down payment for your insurance policy may occasionally be referred to as a "deposit," customers aren't likely to get this money back as it is applied to the overall premium.


About The Zebra

The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.

  • The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
  • The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.
  • The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
  • The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.