No down payment car insurance

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When you first purchase a car insurance policy, you are given options on how to pay – either monthly premiums or lump-sum installments. Why? Because the insurance company requires a minimum fee to secure your policy and cover administrative costs. Additionally, drivers who can afford to pay in larger installments will find that they end up saving more money over the life of the policy.

However, there are some insurance plans that are advertised as no money down auto insurance. Is there really such a thing and is it really that simple? Keep reading to learn more.

What is no down payment car insurance?

No down payment car insurance is a type of policy that does not require an upfront deposit. Once you pay the first month’s premium, your coverage will start.

However, the term no down payment car insurance is somewhat misleading. Insurance companies generally do not sell coverage for free, nor do they sell policies labeled “no down payment.” You will need to pay at least the first month’s premium – in itself a kind of down payment – before your policy can become active.

How no down payment auto insurance works

Drivers can choose to pay their insurance premiums in one of two ways—either in monthly installments or in one lump sum to cover six months or a year at a time. When you pay the annual cost upfront, most insurance companies offer a discounted rate.

Paying more than the first month’s premium ultimately means you are making a down payment. However, that down payment is not a separate cost. Rather, it is part of your annual premium. Think of it as paying a portion of the yearly rate.

If you opt for no down payment insurance, you pay the premium on a monthly basis. For example, if your annual policy costs $800, you would pay around $66 per month. This is a good option for drivers who cannot afford to pay more than the monthly rate at one time. Throughout the policy period, you must pay the minimum monthly rate to keep your auto insurance in effect.

Who can get no down payment insurance?

Not all drivers qualify for no down payment insurance. If you can find an insurance company that offers it, you will need to meet a series of criteria. Most insurance companies will only sell no money down car insurance to people with a clean driving record and a good credit score.

There could also be requirements for your vehicle. Insurance providers give preference to drivers who have an older car that is cheap to insure. Drivers who are considered risky to insure, either because of their accident history, vehicle type or financial situation, have a difficult time getting no down payment insurance.

Another factor to consider is where you live. Currently, the only states that sell no money down car insurance are:

  • Arizona
  • California
  • Florida
  • Georgia
  • New York
  • Oklahoma
  • Washington

How much is no down payment car insurance?

The cost of no down payment car insurance varies greatly and is dependent on your premium. There are a number of factors that impact car insurance premiums. Your age, credit score, state, claim history and the type of car you drive are used to calculate your personalized rate. This is the case for both traditional car insurance and no down payment car insurance.

However, the cost of no money down car insurance is usually more expensive than regular coverage in the long run. You might assume you are saving money by choosing no money down insurance but it is actually the opposite. The more money you can pay upfront, the lower your premium will be.

How to save on no down payment insurance

Drivers who are looking for cheap car insurance with no money down have a few options. Here are several ways that you can save money on no down payment car insurance:

Improve your credit score

Your credit score has a significant impact on your car insurance rate. Typically, drivers can only get no down payment car insurance if they meet certain credit requirements. Improving your credit score can help you get very cheap car insurance with no deposit.

Take a driver safety course

If you take a driver safety course, it may lower your insurance premium. Drivers who take approved courses are learning how to become a safer driver. Presumably, that means you are less likely to get into an accident, which translates to less risk for the insurance company.

Raise your deductible

If you can afford to increase your deductible, it will lower your monthly premium. However, the savings are not significant. Before you increase your deductible, make sure you can afford the higher rate if you do need to file a claim.

How to get no down payment car insurance

Getting no money down car insurance is not as easy as buying regular coverage. It is not available in every state and you usually have to meet certain requirements. If no down payment car insurance is sold in your state, follow these steps to get coverage:

  • Find a provider: First, shop around and find insurance companies that offer no money down policies. You might need to call around and talk to a live agent to get this information.
  • Know the requirements: As you are researching insurance companies, ask about the requirements for getting no down payment insurance. Find out if there is a minimum credit score or guidelines around the types of cars that qualify for coverage.
  • Get quotes: Next, get sample quotes, ideally from a few different companies. Compare the rates to see which company can give you the best price.
  • Sign a policy: The last step is to sign a policy. If you are switching from another insurance provider, make sure that your new policy’s start date overlaps several days with the old policy’s end date.

Frequently asked questions

What is the best car insurance company?

Many drivers want to find the best car insurance company. In reality, there is not a single provider that is the best option for every driver. To find the best car insurance for you, look for companies that meet your unique needs, like robust coverage options, good discounts or highly rated customer service.

Where is no down payment car insurance available?

No down payment car insurance is only available in a handful of states. The states that offer this type of coverage are Arizona, California, Florida, Georgia, New York, Oklahoma and Washington.

Is no down payment car insurance a good choice?

No down payment car insurance can be a good option for some people. Drivers who can only afford their monthly premiums should consider this type of policy. However, no down payment car insurance ends up being more expensive in the long run. Drivers who can afford to make a bigger down payment usually get rewarded with a lower annual rate.

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth has two years of experience writing for insurance domains such as, The Simple Dollar, and NextAdvisor, among others. In addition to auto insurance, Elizabeth regularly writes about home insurance, renters insurance and life insurance. She also covers industry trends and general insurance education.