How to Get Car Insurance with No Down Payment (USA)

By KBB Editors 01/12/2022 4:10pm

Keys and toy red car on an insurance policy

Some non-standard car insurance companies may advertise no down payment insurance, but don’t let that fool you. There’s no such thing as car insurance with no down payment.

Reputable insurers require you to make a payment when purchasing a policy — even if you don’t pay the full premium upfront. The amount you need to pay varies based on the payment schedule you choose.

Can I Get No Down Payment Car Insurance?

The idea of buying car insurance without a down payment is misleading. When you purchase a policy, the insurance company expects payment. However, many insurers allow you to pay for your policy in installments, so you don’t have to come up with the money for the entire premium up front. But if you’re looking for a way to get insurance without making an initial payment, you’re out of luck.

Companies With Cheap Deposits

The amount of money you need to pay in advance depends on the cost of your premium and the number of payments you choose. If you choose a lower premium, you’ll pay less but will typically make larger monthly payments. Luckily, the amount of each payment typically gets reduced from month to month. Because rates vary from insurer to insurer, it can be difficult to know where you can get the lowest rate without getting quotes from multiple providers. Some companies that may offer low upfront costs include:

  • Progressive
  • State Farm
  • USAA
  • Erie

What is the Cost?

If you choose to pay in monthly installments, the premium for your policy will be divided by the number of months in your policy term — usually six or twelve. However, that doesn’t necessarily mean your payments will be the same every month. Some insurers charge a larger first-month payment to help cover the administrative costs of issuing the policy.

Insurance Discounts

Insurance is a necessary expense to drive legally in most states. Although costs for adequate coverage can add up, there are ways to save. Auto insurers offer a wide range of discounts that can help reduce your premium. Discounts vary by insurer, but common ones include:

  • Safe driver
  • Multi-policy
  • Multi-vehicle
  • Homeowner
  • Good student
  • Autopay
  • Pay-in-full

How No Down Payment Car Insurance Works

Although there’s no such thing as no down payment car insurance, you can reduce the amount you have to pay in advance by paying in installments. Payment schedules vary by insurer, but common ones include paying in full, two-payment plans, four-payment plans, and monthly-payment plans. If you don’t pay in full, your premium will be divided between the number of payments you choose, although all payments may not be equal.

What are the Pros and Cons of Paying in Installments?

Some insurers give you a discount on your premium when you pay the full amount up front, but not everyone can afford to do that. The biggest benefit of paying in installments is that you reduce your initial out-of-pocket cost. Yet, more payments may mean you have to pay more. Depending on the insurer, you may have to pay more for:

  • Multiple payments. Some insurers add a surcharge when you don’t pay your premium in full upfront.
  • Paper bills. The insurance company may charge extra if you opt for paper bills instead of e-bills.
  • Credit card payments. Credit card companies charge a fee to process credit card payments. Some insurers may pass this fee along to the policyholder.

It’s important to keep in mind that policies and fees vary from insurer to insurer. According to David Miller vice president of The Plexus Groupe, some insurance companies don’t charge an additional fee when you pay in installments or with a credit card as long as you set up recurring payments. “A lot of them prefer anything recurring. They’ll waive any installment fees because their administrative costs are down.”

How to Find Low-Down-Payment Car Insurance

Since insurance rates can vary significantly from carrier to carrier, the best way to find coverage at a price you can afford is to shop around. Getting quotes from multiple providers doesn’t have to be difficult. You can check out insurance comparison websites to get quotes from multiple insurers with a single application. Or you can apply directly at an insurance company’s website or speak with an agent.

Should You Consider Low-Down-Payment Car Insurance?

Paying your car insurance premium in monthly installments can be a good way for people who can’t afford to pay the entire premium up front to get the coverage they need. By making multiple payments you may be able to avoid skimping on coverage to save on your premium. However, you may be able to save some money if you can afford to pay in full and your insurance company offers a pay-in-full discount.

Editor’s Note: This article has been updated for accuracy since it was originally published.