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What Is No Deposit Car Insurance?
Car insurance can be expensive, depending on where you live. Fortunately, you aren’t required to make a deposit to secure coverage. Once you make the first payment, your policy coverage will start and will remain in effect as long as you pay your premium.
However, there are certain instances when making a down payment on your car insurance can work in your favor, especially if you have some leeway in your budget. Is no down payment car insurance is right for you? More importantly, how can you get a cheaper car insurance rate?
What is a car insurance deposit?
A car insurance deposit is a sum of money you pay to your insurance provider when you sign up for coverage. You can choose your deposit based on what you can afford and what the cost of your annual premium is. It’s important to note that no deposit car insurance isn’t a type of insurance that is offered. It simply refers to how you pay your premium.
When you get a car insurance policy, you can choose to pay your annual premium in one lump sum or spread the payments out evenly over six or 12 months. If you have no deposit car insurance, it just means you’re paying your premium monthly, rather than paying the annual cost upfront, like a deposit.
No insurance company requires customers to make a deposit when they get coverage. However, making a deposit can help you save some money on your policy. Most insurance companies offer a discount for drivers who pay their policy in full, rather than in monthly installments.
Can I get auto insurance without a down payment?
Yes, you can get auto insurance without making a down payment. You can get a quote, submit your application, and sign your policy documents all without paying anything besides your first month’s premium. Many drivers choose to pay their premium in monthly installments rather than in one lump sum or deposit because car insurance can be very costly.
In the United States, the average cost of car insurance is $1,004 per year. If you make a big deposit, you would probably have to pay at least a few hundred dollars. If you prefer to pay in full upfront, you’re looking at a cost of around $1,000, depending on your state.
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When you purchase a car insurance policy, an agent will ask if you want to make a deposit, pay your premium in full or pay on a monthly basis. You have no obligation to make a deposit if you want to pay monthly. If you’re on the fence, ask the agent how much money you could save on your premium by making a deposit upfront.
What are insurance down payments used for?
Insurance down payments go towards your annual premium and one-time administration and processing fees. It may also help cover the cost of onboarding when you first get the policy. Because a down payment isn’t required when you buy car insurance, it’s not used for anything specific besides paying for your policy.
How much do car insurance down payments cost?
The cost of a car insurance deposit is whatever you want it to be. More importantly, whatever you can comfortably afford. You could choose to pay the whole cost of your annual premium, half the cost of your annual premium, a few hundred dollars or $50 — it’s entirely up to you.
If you decide not to make a deposit for your car insurance, you won’t be able to take advantage of the savings. Most insurance companies will take some money off the total cost of your policy if you make a deposit or pay in full. That being said, your rate won’t increase if you decide not to make a deposit.
[ Next: How Much Car Insurance Do You Need? ]
Does full coverage need a downpayment?
You don’t have to make a down payment in order to get full coverage car insurance. Full coverage insurance works just like minimum coverage insurance when it comes to payment, despite the fact that full coverage insurance is more expensive.
You can choose to pay your premium in full with a deposit, or you can spread the payments out over the course of 12 months. There is no penalty for not making a down payment when you buy full coverage car insurance.
How to save on car insurance with a down payment
Making a down payment on your car insurance can help you save some money on your policy. The amount of money you can save really depends on your insurance company and the total cost of your policy. For example, some insurance companies offer a 10% discount if you pay in full. If your policy is $1,200, you could save $120. If the total cost of your policy is only $700, you would only save $70.
How can I make my car insurance cheaper?
No one wants to overpay for their car insurance policy. Fortunately, there are ways to make your car insurance policy cheaper. Here are some suggestions:
- Get multiple quotes to make sure you’re getting the lowest rate possible.
- Take advantage of discounts offered by your insurance provider.
- Increase your deductible to get a slightly lower rate.
- Upgrade your vehicle with safety features, like anti-lock brakes.
- Take an approved defensive driving course.
- Improve your credit score.