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.
- 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" 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. Clearly, paying for only 30 days will be the cheaper option.
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 company.
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 auto 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.
Why is my first car insurance payment more expensive?
Your initial down payment or deposit helps 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. While they may be referred to as a "deposit," customers typically won't ultimately get this money back as it is applied to the overall premium.
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. So, 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, with GEICO coming in second, with all other metrics constant.
AFFORDABLE CAR INSURANCE COMPANIES — AVERAGE SIX-MONTH PREMIUMS
| Company | Premium |
|---|---|
| Allstate | $1,011 |
| Farmers | $822 |
| GEICO | $602 |
| Liberty Mutual | $863 |
| Nationwide | $714 |
| Progressive | $809 |
| State Farm | $647 |
| USAA | $545 |
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 starting point in your search for cheap car insurance.
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 expected premium increases over a three-year period.
At times, you'll need to use your car insurance. For example, if you’re at fault in a collision 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.
AVERAGE CAR INSURANCE COST INCREASE AFTER A CLAIM
| 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.
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 State of Insurance data to see the average rate increase for your state. Again, consider this staying on your insurance premium for three years.
- If it’s cheaper to pay for the damage out-of-pocket, do that.
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 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.
AVERAGE PREMIUM BY COVERAGE LEVEL
| Coverage Level | Average 6-Month Car Insurance Rate | Monthly Rate |
|---|---|---|
| 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.
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.
- Good driver discount
- Student discount
- Paperless discount
- Multi-policy discount
- Payment by bank account
- Paid in full discount
- Multi-vehicle discount
- Telematics programs
- In-vehicle safety devices
Compare auto insurance quotes and find the policy that fits you.
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.
Methodology
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.
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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.
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The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
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The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.
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The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
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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.