Many car insurance companies require policyholders to make a deposit when they sign up for coverage. But you may be able to get very cheap car insurance with no down payment if you shop around.
The simplest way to shop for coverage is to gather car insurance quotes online. Here’s what you should know about getting very cheap car insurance with no deposit.
What is no deposit car insurance?
No deposit car insurance isn’t a term that’s typically used or advertised by reputable insurers. When you search for very cheap car insurance with no deposit, what you’re really looking for are policies that don’t require a down payment when you purchase coverage. These types of policies aren’t easy to come by and they should be approached with some caution, for reasons we’ll explain shortly.
When you buy auto insurance, you’re generally given the option of paying for the policy in full or splitting the cost into monthly payments. If you go with monthly installments, the first payment will usually be the most expensive, and this is considered to be the deposit or down payment on car insurance.
How much money you’ll be required to put down depends on your insurance company. You may only have to pay a few extra dollars, or you may be required to put down as much as one-third of your total premium.
While this is called a “deposit,” it doesn’t work in the same way that a security deposit on a property does, for example. You won’t get it back. It’s figured into the total price of your car insurance—essentially, whatever you pay will be deducted from your overall payments on the policy.
Why do you have to make down a payment? To insurance companies, a customer who doesn’t want to pay a deposit might be someone who wants immediate access to coverage so they can register their car, avoid a registration suspension for not having insurance, or secure a new vehicle from a dealership. The risk is that such a customer may cancel the policy after a short time.
Down payments also help insurance companies cover the onboarding and administrative costs that come with signing a new policyholder.
Who can get no deposit car insurance?
To qualify for car insurance with no deposit or a low deposit, you will need to be perceived by insurance companies as less risky to insure. You’ll need to have a clean driving records and a very good credit score.
The appeal of a clean driving record to insurers is obvious, but how does your credit score impact your car insurance? Most car insurance companies use credit-based insurance scores to help determine rates. Research has shown that these scores can predict the likelihood of drivers getting into accidents.
Drivers with higher credit scores tend to get into fewer accidents, which means they file fewer claims and cost insurance companies less money.
Is no deposit car insurance a good option for you?
No deposit car insurance may be right for you if you’re tight on money and can’t afford to make a down payment. It’s much better than going without car insurance, which is not risky but also illegal in most states.
What to look for when shopping for very cheap car insurance with no deposit
You may hope to find very cheap car insurance with no down payment, but you’re more likely to find low deposit car insurance than no deposit car insurance from reputable companies.
You also need to be careful when you’re shopping for very cheap car insurance with no deposit. Some less-than-reputable companies use the offer of no down payment as a ploy to get you to buy low-quality auto insurance.
To avoid being scammed, keep the following tips in mind:
Verify the company’s status: You want to be sure that any company offering very cheap car insurance with no deposit is a legitimate operation with a solid reputation. Before you commit to a policy, check out online reviews and consult an organization like the Better Business Bureau.
You can also visit your state insurance department’s website—most states offer a car insurance buyer’s guides featuring a list of insurers that are licensed to operate in the state.
Verify access to customer support: If you find an offer of no deposit car insurance from a newer company, that company may not have an established history of reliable customer support. This could be a red flag, as having access to good customer service is key if you ever need to file a claim. You should confirm that the company has an accessible customer support number.
Misconceptions about no deposit car insurance
Since reputable companies typically don’t use the term no deposit car insurance, it’s meaning can be unclear to drivers. Some people may think it means free car insurance, or that they can begin their coverage without paying money, but this isn’t possible—insurers don’t offer coverage until it’s been paid for.
Another possible misconception is that no deposit car insurance means you don’t need to make a deposit to receive a quote. But the fact of the matter is no reputable established company will ever charge you for a quote. If a company tries to claim a fee for providing a quote, take that as a warning sign that they are not a legitimate insurance company.
What you need in order to sign up for cheap no deposit car insurance
Signing up for very cheap no deposit car insurance is very similar to signing up for other types of auto insurance. To qualify, you need to provide personal information and details about your vehicle.
Your rate will be determined by factors including:
- Your age
- Your location
- Your driving record
- Your credit score
- Your car’s make, model, and year
- How much mileage you log
- Who else will be operating the car
If you do manage to find a legitimate company offering very cheap car insurance with no down payment, be sure to examine the numbers in your quote. In exchange for not imposing a deposit, the company will usually charge you a higher monthly premium. If this is the case, you could pay more money over the term of your policy than if you had made an initial deposit.
If you decide you’re happy with the quote, you can buy car insurance instantly. If you’re less than satisfied, you’ll have to do some more shopping. To keep the monthly payments reasonable, you may be better off buying low deposit car insurance instead of no deposit coverage.
Frequently asked questions about very cheap car insurance with no down payment
Do all insurance companies require a down payment?
Most companies do require a down payment if you choose to pay your car insurance premium in monthly installments. By requiring drivers to pay a deposit, these companies are ensuring that you have a financial stake in their auto policies and are likely to stick around.
Some companies offer very cheap car insurance with no deposit, but they may be newcomers without an established record; others may be outright frauds. It’s important to do your due diligence before signing up for an auto policy with no down payment to ensure that your coverage is legitimate and you can get the customer support you need if you file a claim.
What is the cheapest way to get car insurance?
The surest way to get cheap car insurance is to shop around for the best possible rates. You can easily collect several quotes in a short amount of time by going online. You should also see if you qualify for discounts to lower your rate.
In the long term, you can get cheap car insurance by keeping a clean driving record and improving your credit score. Safe drivers may be offered some of the cheapest rates on the market, and insurers prefer drivers with good credit because there is a correlation between having bad credit and filing insurance claims.
What do you do if you can’t afford car insurance?
If your current insurance company is jacking up your premium, or if you’ve been quoted an outrageous price for a new policy, there’s no need to panic. You may be able to find a more affordable plan by shopping around and comparing prices.
Insurance companies each use their own proprietary formulas to weigh multiple factors and settle on premiums, so prices can vary significantly from company to company.
Another way to pay less for car insurance is to lower your coverage limits and raise your deductibles, but this option can be risky. If you get into an accident, you may have to pay more out of pocket if your limits are low. And if your deductible is high, you may be better off just paying out of pocket instead of filing a claim and risking a rise in your premium.
Can I just stop paying my car insurance?
You can stop paying for car insurance, but should you? Absolutely not. Once you stop making payments, your car insurance will lapse and you’ll close your coverage. And when that happens, depending on the state where you reside, it could be illegal to drive your vehicle.
If you’re caught driving illegally, you could be hit with fees, have your car impounded, lose your driver’s license, or even be sent to jail.
If you’re struggling to pay for car insurance, you could apply for state-subsidized car insurance, depending on where you live. Some states will help you purchase car insurance if you can’t afford coverage otherwise. To qualify for this program, you’ll have to meet certain requirements like falling below a specific income level.
Is there an alternative to car insurance?
While state governments and insurers stress the importance of buying adequate car insurance, in some states, you can deposit cash or post a bond with the state instead of getting an auto policy.
For example, in Massachusetts you can deposit funds or post a bond worth $10,000, which is on the cheaper side. In Maine, the deposited funds or bond must be worth a whopping $127,000.
These alternatives are basically a form of self-insurance. Since most people are unlikely to have enough money on hand to deposit cash with the state, and since locking up your money in a deposit or bond may not be the wisest investment, it’s recommended that you look into getting car insurance instead.
How to get very cheap car insurance with no deposit
To buy very cheap car insurance with no deposit, you’ll have to shop around. The easiest, fastest way to shop for car insurance quotes is to head online, and you can reduce the time commitment even further by using a digital comparison tool like Jerry.ai.
Jerry is a no-fee app that’s simplifying the car insurance shopping process by doing all the hard work for you. Once you sign up, Jerry will gather quotes that compare to your current level of coverage. The app will also send you new quotes every time your policy comes up for renewal, so you’re always getting the coverage you want at the best price.
If you decide to switch plans, you just need to click a button—Jerry will take care of all the paperwork to set up your new policy and cancel your old one. There’s very little effort required on your part.
If you’re on the hunt for very cheap car insurance with no down payment, Jerry.ai could deliver what you’re looking for. It’s fast, it’s easy, and it’s free—insurance shopping doesn’t get any simpler than this!