Who Offers No Down Payment Car Insurance?
Simply put, most reputable auto insurance providers require some form of a down payment or deposit, even if it’s just your first monthly payment. A deposit or down payment protects the insurance companies as well as makes it more likely you’ll keep coverage on your vehicle — it’s a legal requirement, after all.
You might feel like a down payment increases your insurance costs, but it’s actually part of your total premium; you’re just paying part of your insurance premium up front to begin your coverage. So, hunting for “no down payment car insurance” as a way to save money doesn’t actually save you money. Consider taking advantage of savings for paying semi-annually or annually, maintaining a clean driving record, or enrolling in driver training instead.
How Do You Pay Car Insurance Premiums?
Most car insurance companies offer three ways to pay your car insurance premium: monthly, semi-annually, and annually. The method that works best for you depends on your personal financial situation.
- Monthly: Paying monthly means making a car insurance payment each month until you’ve paid the annual cost in full.
- Semi-Annually*: Paying semi-annually means you pay the first six months up front, and the final six months at the half-year mark.
- Annually*: Paying annually means you make one lump sum payment at the beginning of your coverage period for the entire year.
Generally, insurance providers offer discounts if you choose to pay semi-annually or annually. For example, GEICO offers up to $60 off your annual insurance premium if you choose to pay semi-annually.
What Does “No Down Payment” Mean?
Most car insurance companies* require a deposit, or down payment, when you buy an auto insurance policy. Deposits or down payments encourage policyholders to maintain coverage throughout the duration of their policies. They also protect insurance companies from vehicle owners who only want coverage long enough to meet legal requirements, such as vehicle registration.
* Note that no state requires a car insurance deposit. States set a minimum insurance requirement consisting of liability coverage and, for some states, personal injury protection (PIP) and/or uninsured and underinsured coverage.
Are Down Payments and First Payments the Same?
Sometimes, a down payment is simply the first payment. Your insurance provider might not require anything more especially if you have a clean driving record and solid credit.
Otherwise, you will pay the deposit:
- Along with your first premium payment, making your first payment a bit higher than your subsequent payments.
- Spread over the course of your policy, making each monthly payment slightly higher but also making the deposit more manageable.
Currently, you can find car insurance with no down payment or a low down payment in the following states:
- New York.
Down Payments and Car Insurance Quotes
You should not have to make a down payment to get a car insurance quote. Too many reputable auto coverage providers offer free car insurance quotes. For example, you can visit State Farm, Liberty Mutual, Allstate, Progressive, and GEICO online and get a free insurance quote.
Reduce Coverage for Cheaper Car Insurance
Another common way to get more affordable car insurance is to reduce the amount of coverage you have or want. Of course, there are limits to this depending on your situation.
For example, if you have paid off your car loan and own your vehicle in full, you can get away with your state’s minimum insurance requirements. This includes bodily and property damage liability and, for some states, personal injury protection (PIP, or “no-fault insurance”) and/or uninsured and underinsured coverage.
However, if you still owe on your auto loan you’ll need to meet the collision and comprehensive coverage requirements set by your bank or lender. Owners of newer vehicles might also want gap insurance and possibly new car replacement insurance. However, these aren’t required and will increase your premiums.
Find Companies That Offer Affordable Auto Insurance
Even when you have to pay a car insurance down payment, some companies offer cheaper car insurance premiums than others. They base these rates on factors you can control and factors you can’t control.
For example, many companies look at your driving record when determining your car insurance rates. You can control your driving record by avoiding driving under the influence, causing car accidents, and getting tickets for infractions such as speeding and reckless driving. However, if you do get a blemish on your driving record, you can look at companies like Erie, American Family, USAA, and Mercury for the cheapest rates. These companies provide affordable quotes for drivers who have a mark or two in their records.
On the other hand, there are factors outside of your control like your age. Many car insurance companies charge much higher rates for young drivers than they do for older drivers. So, if you’re a teen or have a teen driver, try getting a quote from companies like Erie, USAA, and Mercury.
Cheap Car Insurance With a Down Payment
It’s not likely you’ll get an insurance policy without a down payment. In the very least, you will need to pay the first month payment as a down payment. Nevertheless, you can still find affordable coverage. In addition to getting a lower deposit for having a clear driving record or bundling multiple lines of insurance, you can take advantage of discounts. Shop around with numerous insurance providers and ask each agent about discounts for being a good student, having a low mileage vehicle, completing driver training, being a member of the military, and opting to pay semi-annually or annually rather than monthly.