Affordable No Down Payment
Auto Insurance

Can I get auto insurance with no down payment?

If you’re in the market for new car insurance, you have a few options available to you. On one hand, you can cough up a sizable chunk of change and pay the full auto insurance rate in total. Choosing this route often yields auto insurance discounts for an upfront payment. Or you can go with the alternative (a popular choice for many drivers on a budget) and pay monthly car insurance rates.

Keep in mind, opting to pay a monthly car insurance premium can still have upfront costs, in the form of an initial down payment, as a sign of good faith. While there are still auto insurance companies that accept checks for the down payment out there, the check still has to clear before your coverage will go into full force. (For more information, read our “Cheap Car Insurance Companies“)

How much is this first down payment? And what if you can’t afford it?

The fact is, you need money to pay car insurance bills, but sometimes that’s the last thing you want to spend money on. That’s when “buy now, pay later” cheap car insurance is tempting.

A typical car insurance down payment for a monthly rate could equal up to two months of coverage. Auto insurance down payments may depend on individual policies and states, but they are often estimated at anywhere from 20% to 33% of a six-month total.

Here’s where you come to a rock and a hard place: If you’ve chosen to pay a low monthly car insurance rate because you can’t afford to pay a six-month rate upfront, you’ll likely have a hard time coming up with a 30% down payment.

This leads us to door number three. There is a possibility of securing zero down payment auto insurance, cutting out an upfront cash commitment altogether, though this auto insurance deal is not available in all states or from any service provider.

What will you get when you find a company that offers no down payment auto insurance?

Your first monthly payment may be used as the policy down payment on your annual premium, providing the illusion that you are getting zero down payment car insurance. A car insurance provider that waives your down payment in this manner minimizes your out-of-pocket costs.

Some companies will also offer discounted deposits, like $20 down payment car insurance from companies like Geico. They may also offer cheaper car insurance such as auto insurance for $30 a month.

What’s the catch with no deposit auto insurance?

As described above, an auto insurance provider may offer the cheapest car insurance with no down payment insurance by waiving the down payment and applying it as your first month’s payment. This is ideal. However, since $0 down auto insurance is in high demand for those strapped for cash, an insurance company may use this golden opportunity to increase your monthly premium in lieu of a down payment. This could lead to a higher monthly payment.

To provide a better example, an insurer may quote you $400 for annual premiums, paid in full. They may also offer you the alternative of no down payment auto insurance rates of $45 per month. Thinking back to math class. Which is the better deal? Paying month-to-month with no down payment will ultimately cost you $540 per year, $140 more than the annual rate paid in advance.

Yet for those who don’t have $400 to spare, paying more for no down payment insurance over the course of a year may still be the better choice to have auto insurance coverage. With no down payment car insurance, you will completely bypass the cash obligation. But keep in mind, you may still have to pay a minimal administrative processing fee to open the policy. You will also be responsible for all monthly payments. If you only need coverage for a short period of time, you can see if buying temporary auto insurance is right for you.

The one thing that you don’t want to do is go without car insurance. The Insurance Information Institute reports that in 2015, 13% of drivers were uninsured making uninsured motorist coverage essential. Most states require that you carry at least minimum coverage and can issue fines or suspend your driver’s license if you don’t.

How much does no down payment auto insurance cost?

Who has the cheapest auto insurance? If I’m looking for dirt cheap auto insurance, where can I find the lowest rate? How much does auto insurance cost? These are common questions often asked when people are searching for auto insurance with no required deposit.

As you probably know by now after shopping and comparing car insurance online, your individual insurance rate will depend on a number of variables.

What Impacts Your Auto Insurance Rate?

9%

Insurance Company & Policy Options

25%

Age, Marital Status, and Gender

35%

Driving Record & Claim History

What
Impacts Your Car
Insurance Rate?

2%

Occupation

3%

Credit

8%

Location

18%

Car Make/Model

What are the no down payment auto insurance companies?

The no down payment car insurance companies are:

• USAA
• Farm Bureau Insurance
• Erie
• Auto-Owners Insurance
• State Farm
• American Family
• Geico
• Progressive
• Metropolitan
• Nationwide
• Allstate
• Travelers
• Farmers

Since your driving record has the most impact on your auto insurance rates, let’s look at how your rates can change with an accident, speeding ticket, or DUI.

Average Annual Auto Insurance Rates by Driving History

Companies	Average Annual Rates with a Clean Record	Average Annual Rates with One Accident	Average Annual Rates with One DUI	Average Annual Rates with One Speeding Violation
Allstate	$3,819.90	$4,987.68	$6,260.73	$4,483.51
American Family	$2,693.61	$3,722.75	$4,330.24	$3,025.74
Farmers	$3,460.60	$4,518.73	$4,718.75	$4,079.01
Geico	$2,145.96	$3,192.77	$4,875.87	$2,645.43
Liberty Mutual	$4,774.30	$6,204.78	$7,613.48	$5,701.26
Nationwide	$2,746.18	$3,396.95	$4,543.20	$3,113.68
Progressive	$3,393.09	$4,777.04	$3,969.65	$4,002.28
State Farm	$2,821.18	$3,396.01	$3,636.80	$3,186.01
Travelers	$3,447.69	$4,289.74	$5,741.40	$4,260.80
USAA	$1,933.68	$2,516.24	$3,506.03	$2,193.25

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A clean driving record will keep your rates to around $260 a month, but one accident will jump your rates to about $340 a month. Of course, if you stay with certain insurers, they may offer services like accident forgiveness and there are cheap auto insurance companies that accept drivers with multiple accidents. The average cost when you’re switching to a new company will not have that discount, though. If you’re a safe driver, your annual premium will fall over time.

Your credit history also affects your rates. According to Experian, the average credit score in the U.S. is 714, which is considered good. If your score is lower than average, there are ways to improve it like paying your bills on time. Credit history can have as big an impact on your rates as some driving habits.

Some factors, like your credit score, can easily be improved. Do what you can to improve your score to get the lowest car insurance rate. Other factors, like having teen drivers, will require patience. Yes, some companies offer discounts for good grades and driving classes. The national average for teens remains high because they have limited experience and present a higher risk.

Did you know?

• You can challenge your driving record?
• Older drivers aren‘t penalized for age?
• The car you choose makes a big difference?

Just like any other car insurance policy, your no down payment quote will be composed of several insurance components that can impact price, including but not limited to liability coverage, collision coverage, and uninsured/underinsured motorist coverage.

You may need to buy liability auto insurance coverage because it is the coverage required in all 50 states and is mandatory. Other coverage options, including add-ons like collision coverage, will offer extra protection and can increase your base rate further. The best way to approach getting a good deal on no down payment car insurance is just as you would any other policy. We’ll cover how to keep your no down payment insurance affordable in the next section.

How does auto insurance down payment affect monthly rates?

Now, imagine the cost of car insurance monthly payments if you pay a deposit at the beginning of the policy. You’re paying a portion up front, and you have to pay any remaining balance in the coming months. Auto insurance with a low down payment will make your monthly payments more expensive. Car insurance companies that don’t require a deposit may not have low payment car insurance options.

Let’s look at an example of how a no down payment car insurance affects monthly rates and how deposits lower them.

No Down Payment Auto Insurance Compared to Depositing Auto Insurance

These monthly rates are based on annual auto insurance rates worth $3,000, and 10% of $3,000 is $300. The car insurance company will deduct $300 from the policy total. If you have a 12-month policy, your auto insurance provider will divide your annual rate by 12 to get the monthly rate, which would be $2,700 for the year.

Some companies only offer policies for a six-month period. In that case, your annual rate will be divided into two. For the sake of the example, a six-month car insurance policy would be $1,500. However, the deposit rules are the same. The more you deposit, the cheaper your monthly auto insurance premiums.