A car insurance down payment is the amount you must pay to the provider to secure coverage—but you may be able to skip it if you pay your premium in full.

Written by Amy Bobinger

Edited by Jessica Barrett

Updated on Jan 31, 2024

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Understanding car insurance down payments
How much is a car down payment?
Is it possible to get no down payment car insurance?
Comparing quotes could help you lower your car insurance costs by 30% or more
FAQs

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When you start a new car insurance policy on a monthly payment plan, your insurance company will likely add a down payment to your first installment. In general, the only way to avoid making this down payment is to pay your 6- or 12-month premium in full at the start of the policy.

Understanding car insurance down payments

If you plan to pay for your car insurance in monthly installments, you’ll generally have to pay a down payment at the start of your policy. This initial payment helps offset some of the insurance company’s risk in covering month-to-month customers—the down payment ensures that there’s at least some revenue coming in if customers file a claim shortly after beginning a new policy.

When you purchase your policy, here’s what you’ll need to do:

Make a down payment, which is typically up to 30% of your total annual premium

Set up a monthly payment plan to cover your policy installments

Pay the first month of your premium

Need to know:

When you enroll in a monthly payment plan, you may be charged an additional fee (often called an installment fee). This is separate from your down payment and will generally be applied to each monthly premium.

How much is a car down payment?

The amount of the down payment on car insurance is usually either your first month’s premium or a percentage of the total policy cost—typically up to 30%. You’re required to pay this amount to start your new auto insurance policy.

Is it possible to get no down payment car insurance?

Unless you’re paying for your whole insurance policy upfront, you’ll need to pay a car insurance down payment. There is no other way to get car insurance without a down payment.

You may see advertisements where insurers claim to offer no deposit car insurance (or $20 down payment car insurance), but be sure to research the company carefully before buying one of these plans. Most legitimate providers require at least a whole month’s installment as a down payment—if they’re offering less than this, it could be a scam.

How paying your car insurance upfront could save you money

The good news is that paying for your whole 6- or 12-month car insurance premium at the start of your policy can help you save.

Paid-in-full discount: Many insurance companies offer

car insurance discounts

for paying your premium in full at the start of your policy term. These discounts typically range from 5–15% off your total premium cost.

No installment fees: Installment fees are an additional charge added on top of your total policy when you split your car insurance into multiple payments. If you pay all at once, you won’t be charged installment fees.

If you buy insurance with

Jerry

, you can compare payment options—so it’s easy to see what you could save by paying in full instead of in month-to-month installments.

Comparing quotes could help you lower your car insurance costs by 30% or more

If you’re trying to cut costs on your monthly car insurance bill, there are easier ways to save than trying to side-step making a down payment. And even if you can afford to pay your premium in full upfront, finding insurance savings means more money in your pocket.

Shop for car insurance quotes with

Jerry

to see the most competitive offers taken from a comparison of dozens of auto insurance companies.

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The easiest way to save on your car insurance rates is by comparison shopping for quotes from at least 3–5 insurance companies. In fact, drivers who compare quotes before buying a policy save an average of more than $600 a year on their car insurance costs.

Your car insurance premium is based on a variety of factors, including your driving history, vehicle, driving experience, location, credit score, and more—but each insurer weighs these factors differently. When you compare auto insurance quotes, you’re more likely to find an insurer that offers cheap car insurance to drivers who fit your profile.

FAQs

Why do insurance companies use down payments?

Car insurance companies add down payments to the first month’s payment to help offset some of the risk that comes with covering customers who pay on a monthly installment plan.

Is it better to pay car insurance upfront?

Yes, if you can afford it, it’s usually better to pay your car insurance upfront because you’ll typically pay less overall. But that can be a large amount of money to pay at once, so if paying upfront will put you in a financial bind, it’s probably better to stick to a monthly plan.

Can I get no down payment car insurance?

No down payment car insurance (or very low down payment car insurance) is usually a scam. Most reputable auto insurance providers will require you to make a down payment if you pay monthly installments, and your policy will not take effect until the first payment is made.

Are car insurance payments refundable?

If you pay your car insurance premium and then cancel your policy before the next payment is due, you’ll be entitled to a refund of any unused portion of the premium, minus any cancellation fees or administrative costs deducted by the insurer.