No Money Down Car Insurance

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No Money Down Car Insurance

Auto insurance is an unavoidable expense most people have to pay. It’s mandatory by law in almost every state. It can also be costly for many people and unaffordable for others. If you are short on cash but need your vehicle insured right away, a no money down car insurance policy can help you. Let’s go over the pros and cons of no deposit auto insurance policies and look at some tips that can save you more money.

Most people don’t have enough money saved to pay for the entire policy upfront. For some, even paying for a down payment can be challenging. The good news is some carriers offer no money down auto insurance policies that can get drivers insured with little out-of-pocket expense. It’s important to note that not all companies provide this type of deal, and not every driver will qualify. It is not offered by every insurer and is only available in select states.

What Exactly is No Down Payment Auto Insurance?

Some people falsely presume they can get insured without paying any money upfront. They falsely believe they can get free car insurance for a certain period of time, often for one month. This is not the case.

Zero down car insurance means you are not required to pay for the entire six-month or twelve-month premium upfront. However, you are still obligated to pay for the first installment payment. So, for example, if your policy costs a total of $1,200 for a year of coverage and it’s broken into 12 equal payments, you will need to pay $100 for your policy to become active and valid. While you will not have to make a large deposit of $300 or $400, you will still need to make the first payment.

No auto insurance company will ever insure a driver without first receiving some form of payment. If someone touts first month free car insurance, they are not telling the truth. No money down car insurance just means your first installment payment will be credited as the deposit.

The first payment could be as low as $35 for qualified motorists for state minimum policies. Get a free rate quote in about five minutes to check rates and down payment amounts in your area. To start, enter your zip code.

How often do you Pay for Car Insurance

Insurers Often Require Down Payments

A customer that is trying to get free car insurance raises concerns for companies. It might suggest that the person just wants to get insured for a short time and then cancel the policy. For example, they might borrow a car or test drive a vehicle they consider buying from a dealer for a week.

In any case, a customer who wants to insure a vehicle for free is typically not a customer who sticks around for years with the same insurer. This is why most insurers require a deposit or down payment, often 10% to 20% of the annual premium.

Carriers Often Lose Money on No Down Payment Auto Insurance Policies

While some insurers in select states do offer so-called no down payment car insurance deals, most companies don’t sell these policies. The types of customers these policies attract often turn into money losers. 

Customers looking for free car insurance are more likely to file a claim, miss payments or not pay at all, and switch insurers more often. In general, it’s usually not profitable for providers to offer no deposit auto insurance plans. Insurers want financially stable customers who pay their premium on time, renew their policy for years, and never commit insurance fraud.

What is an Auto Insurance Down Payment?

Most people mistakenly think a down payment is an additional fee added to the policy premium. This is not the case. A down payment is taken from the premium’s overall cost, whether it’s six months or twelve months. For example, let’s say a 12-month policy costs $1,500, and the insurer requires a $300 down payment. The customer would then pay $300 upfront and 12 equal payments of $100.

With no deposit car insurance, there is no down payment requirement. The customer only needs to make the first installment payment. A zero-down policy can mean the difference between getting insured or not for those on a really tight budget. 

Remember, never drive a vehicle uninsured. It is against the law and could cost you thousands if you get into an at-fault accident. Always drive with the legal amount of coverage in the state where you reside.

The Cost of a No-Down-Payment-Policy

The amount you pay for auto insurance is based on numerous factors. In general, the rates you pay are based on the risk you present to the insurer and the type of coverage you get. Not every person will qualify for a no money down car insurance policy. The premiums for this type of policy will also vary from one insurer to another. Rate factors include:

  • Drivers Gender and Age
  • Years of Driving Experience
  • Driving Record
  • Type of Vehicle
  • Homeowner or Renter
  • Credit History
  • Zip Code Where the Vehicle is Parked
  • Married or Single 
  • Miles Driven per Month

The less risk you pose as a driver, the greater your chance of qualifying for a zero down auto insurance policy. On the other hand, if you have bad credit, at-fault accidents, and are currently uninsured, you probably won’t be able to get a no-down car insurance policy.

The down-payment requirement might be as much as 40% to 50% of the overall premium for high-risk drivers. In cases where a driver has multiple DUIs (driving under the influence) or reckless driving offenses, it might be difficult to get insured and impossible to get no deposit car insurance.    

Providers that Offer No Money Down Car Insurance

Not every insurer offers no down payment car insurance, but several do. This includes:

  • Safe Auto
  • Progressive
  • State Farm
  • Kemper
  • Allstate
  • Esurance

States that Offer No Money Down Car Insurance Policies

It’s important to note that not every state allows no down payment auto insurance policies. States that do allow it are:

  • New York
  • Florida
  • Arizona
  • Oklahoma
  • Georgia
  • California
  • Washington

Payment Options 

Most auto insurance premiums are paid in monthly installments or by making an annual payment. If you pay the entire premium upfront, you can often sell 2% to 3%. Many people buying coverage for the first time ask, how can I buy no money down car insurance? The answer depends on several critical factors, including the insurer and where you live. Let’s explore several options to help you get the lowest down payment car insurance possible.

If you can afford it, pay for the entire premium upfront so you can get the discount. It will also be one less monthly bill you have to worry about. On the other hand, you might want to break up the premium cost into monthly payments if you don’t have the money to pay the total premium. It is a significant benefit for those on a tight budget who otherwise could not afford to get insured. 

Almost All Insurers Offer Yearly Payments

Most car insurance companies give their customers the option to pay auto insurance no money up front. You might ask, why do they do this? Insurers make a large portion of their income by investing the premiums. 

This means the more money they can get upfront from each policyholder, the more they have to invest. It often results in a higher ROI, or return on investment, for the insurer in good investment market conditions. It can be the difference for some carriers between being profitable and not.

Because of this and other reasons, nearly all auto insurance firms offer discounts for paying your policy in full and upfront. It is one of the easiest discounts to get, and almost all insurers offer it. If you have adequate savings, it makes sense to pay for your automobile insurance costs upfront.

Why doesn’t everyone do it if you can save more by paying the entire premium in one lump sum? The obvious answer is many people just don’t have enough savings to make a full yearly payment. An annual auto insurance policy can often cost $800 for liability-only coverage in many markets to over $3,000 for comprehensive coverage on a newer vehicle.

Many consumers just don’t have that amount of cash lying around. Also, the option of buying a no money down car insurance policy is not available to everyone. Some people won’t qualify, and many carriers will require a down payment.

Most people pay their premiums in small monthly installments, even if they have the funds to pay the premium in full. Check the cheapest online rates by entering your zip code. Get matched with multiple insurers’ best rates and take advantage of online discounts that can save you more.

Monthly Auto Insurance Installment Plans

Don’t worry if you can’t afford to pay all of your premiums upfront. Nearly all insurers offer easy monthly installment plans. You should be aware that most no down payment car insurance companies will add on extra fees, in addition to charging interest. 

You should also carefully review all the wording in your insurance policy, including all the fees and interest you will be paying. This is important because some companies offering instant car insurance with no deposit might have a lower yearly coverage rate but charge more interest and fees. It can be deceptive and cause serious confusion, not to mention higher payments.

You can figure out your total annual cost of auto insurance by adding up all the monthly payments. Some carriers might charge a small fee for the option of paying monthly but not charge interest. This is why it is essential to shop around and review ten or more quotes before deciding on one particular insurer.

Cheap Liability Only Policies

If you want the cheapest car insurance with no deposit, you will be looking at state minimum liability-only coverage. If you have a good driving record and a cheap used car, getting a year of coverage for $450 or less might be possible. That equates to a monthly payment of only $37.50.

Pay your entire premium upfront to save the most money on liability insurance. While you might not have $1,500 saved up for a high limit collision of comprehensive insurance, you should be able to afford a one-time payment of $400 or $500 for a liability policy.

Getting a Low Deposit Auto Insurance Policy

If you are tight on cash, you should try and get covered with a low down payment plan with monthly installments. There are a few requirements for getting auto insurance with $20 down or even no deposit coverage. You will need:

  • A Good Driving Record
  • Be Over the Age of 25
  • Have Good Credit
  • A Good History of Continuous Coverage

You can get car insurance with no deposit if you meet these requirements. If you have bad credit or have often canceled your policies in the past, you will be required to pay a deposit of 20% or more of the yearly premium. This is why it’s essential to maintain a good driving record, keep your credit score above 650, and save even more, over 700.  

Takeaways on No Money Down Car Insurance

Buying car insurance is something that almost everyone that drives has to do. It makes sense to pay the entire premium upfront for those with adequate savings. There are monthly installments available for people who cannot afford to pay for their entire policy in one payment, but check the fees and interest you will be paying.

Finding no money down car insurance plan starts with comparing multiple quotes from regional and national providers. If you have excellent credit and more than ten years of continuous coverage, insurers will bend over backward to earn your business. 

Insurers will often offer incentives, including no deposit car insurance policies, to get your business. Compare auto insurance quotes near you. To get started, enter your zip code and lower your auto insurance rates today.