How to Get Very Cheap Car Insurance with No Deposit/Down Payment

You can get very cheap car insurance with no deposit by choosing a monthly payment plan from a top-rated company. The best cheap car insurance with no deposit is from Geico, AAA, and USAA, according to WalletHub’s analysis. These companies offer low monthly rates in addition to great customer service and a wide range of available discounts.

Very cheap car insurance with no deposit is actually a bit of a misleading concept since it implies that you could get a car insurance policy without making any payments first. You will always have to pay something up front, usually at least the first month’s premium, in order to get coverage. However, there is no additional deposit or down payment beyond that first month’s premium.

Very Cheap Car Insurance with No Deposit

Note: Premiums are representative of a minimum-coverage plan; individual premiums will be different.

Key Things to Know About No Deposit Car Insurance

• Your policy will not be active until some amount of the premium is paid for.
• Drivers who are unable to pay for at least the first month of premiums are a red flag for insurance companies – insurers want long-term, safe-driving customers.
• Insurance companies sometimes charge a higher amount the first month to offset costs like requesting a full driving history, initial underwriting, and other administrative tasks associated with setting up a new customer. Some people refer to this as a deposit.
• Paying monthly instead of in full up front will cost more in the long run. For instance, if your car insurance policy costs $1,200 per year, your monthly payments should be $100, but your insurer will likely charge more to cover the administrative expenses associated with monthly billing.
• Most insurers offer discounts for paying your premium in full at the start of your policy. If your premium is $1,200 per year, for example, a pay-in-full discount of 7.5% would save you $90 per year.

How No Deposit Car Insurance Works

No deposit car insurance works the same way as regular car insurance, except initial costs are minimized. No deposit car insurance refers to policies that allow you to only pay for the first month of coverage up front. Here’s how it works from the policyholder’s perspective:

1. Choose to pay your policy more frequently.

Choosing to pay monthly or for your whole policy up front will not affect whether your insurer charges an additional fee, or a “deposit,” for administrative charges. However, paying monthly will mean a lower upfront payment. This may be more expensive annually, but it’s a great way to get inexpensive coverage quickly. You can also pay for your policy in full up front. While this requires you to pay more initially, it will cost less in the long run and many insurers actually offer a pay-in-full discount.

2. Pay for the first month up front.

No deposit car insurance allows you to pay for only the first month of coverage up front, rather than charging you an extra fee to cover administrative costs. This upfront payment may be partially refundable if you cancel your policy before the full amount of time you’ve paid for ends.

3. Use your policy like normal.

Other than the upfront payment, very cheap no deposit car insurance works the same way as a regular policy. You can contact your insurer like normal for things such as filing claims, asking questions about your policy, or adding a driver or an additional vehicle.

8 Tips for Getting Very Cheap Car Insurance with No Deposit

Don’t Be Misled by Advertising

If a reputable company or insurance agent advertises “no deposit” car insurance, they mean you won’t have to pay anything beyond your first month of premiums.

Beware of Scams

As with most things, if it seems too good to be true, it probably is. Companies that advertise car insurance with no down payment, no deposit, or the first month free are likely not reputable and should be avoided.

Understand How Temporary Car Insurance Really Works

In addition to companies that claim to offer no-deposit insurance, some also advertise temporary car insurance. In reality, the shortest policy term that you can have from a reputable company will be six months. By paying monthly, you can cancel or switch at any time, though.

Don’t Pay for Quotes

A common scam is requiring a deposit in exchange for car insurance quotes. Car insurance quotes from reputable companies and comparison sites should always be free – anyone who charges you is likely just stealing your money.

Compare Quotes Regularly

To ensure you’re getting the best deal possible, regularly compare quotes from several insurance companies.

Change Your Coverage or Deductible

If your current insurance costs more than you can afford, check how much coverage you have and compare it to how much you actually need. You can also consider raising your deductibles to help lower your monthly premiums.

Look for Discounts

Most insurers offer discounts for paying in full at the start of your policy. Beyond that, companies offer discounts for a lot of different things, like being a safe driver or having multiple vehicles insured by the same company.

Keep Your Driving Record Clean

Having a clean driving record, as well as a good credit score and a solid history of paying insurance premiums on time, will help to make you a more attractive candidate for insurance companies. If you don’t have a great driving record, consider taking a defensive driving course to learn better driving practices, and maybe even get a discount on your premiums for taking it.

Video: How to Get Very Cheap Car Insurance with No Deposit/Down Payment

Methodology

The best cheap car insurance companies with no deposit were determined based on a comparison of the major auto insurance companies. WalletHub editors analyzed each company’s average car insurance premiums and considered consumer ratings to create the ranking.