Cheapest car insurance with no down payment

Some drivers may be looking for very cheap auto insurance with no deposit required, but you should expect to deposit a certain amount in most cases. When buying auto insurance, the money you deposit is what binds the policy, which puts your coverage into effect (or activates your coverage). However, the money you pay upfront is technically not a deposit. Instead, it’s your first premium payment, or installment. You can also pay monthly rather than in a lump sum for the entire policy period if you prefer to make small payments throughout the year.

Key points to remember

  • Most insurers require a “down payment“, or first policy payment, immediately. However, some carriers may not.
  • Auto-Owners, Geico, and Amica can offer cheap auto insurance for drivers looking for low “down payments.”
  • An automobile insurance policy is not in force, or active, until a payment is made and until the effective date of the policy.
  • While paying monthly may be easier on your budget, it may cost more than paying a lump sum over the long term.

Which companies offer cheap car insurance without a deposit?

Looking specifically for super cheap car insurance with no deposit probably wouldn’t yield many credible options, since you have to pay something for the policy to activate coverage in many cases. However, there are several options for affordable, no-down payment or low-down payment coverage. For example, you may be able to get cheap minimum coverage auto insurance from insurers like Auto-Owners, Geico, and Amica based on the average premiums of the carriers we reviewed.

When insurers offer a no-down payment option, you save on one month of your premium payment and instead pay for the remaining months of your policy at a higher rate until you renew. What many drivers looking for cheap car insurance with no down payment may actually be looking for is cheaper coverage overall. Finding cheap insurers could be an effective way to reduce the impact of your premium on your budget.

Similarly, Auto-Owners, Geico and State Farm could be considered to offer comprehensive car insurance with no down payment, or at least with a minimum down payment based on our average Quadrant Information Services rates. Your individual rate will vary based on factors such as your driving record, claims history and coverage needs.

car owners $27 $109
Geico $30 $108
Amica $37 $125
state farm $38 $116
Travelers $40 $121

How much does a car insurance deposit cost?

Although not a down payment, the cost of activating your car insurance policy will depend on your premium for the entire policy period, which is 6 or 12 months. You usually have the option of paying the entire premium for the period of insurance in advance, semi-annually, quarterly or in monthly installments. If you pay your auto insurance in instalmentsyou could end up paying more if the insurer adds an installment fee.

The table below shows how much upfront you may need to pay, on average, to finalize a car insurance policy with some of the best cheap insurers. Although these are averages, these rates can be used as a benchmark to see if you are receiving a competitive quote, depending on whether you choose to pay your entire year’s premium in a lump sum or monthly.

car owners $1,305 $109
Geico $1,297 $108
Amica $1,495 $125
state farm $1,397 $116
Travelers $1,447 $121

*Average annual premiums do not include full discount (if available)

**Average monthly premiums do not include installment fees.

What to keep in mind when buying car insurance with no down payment

If you’re looking for cheap auto insurance with no down payment, there are a few things to keep in mind. These tips can help you save on your car insurance costs.

Paying monthly could cost more in the long run

While paying your car insurance monthly is better for your budget, it could end up costing you more in the long run. This is because most insurance companies charge an installment fee for each payment. So if you have a six month policy with a carrier charging a monthly fee of $3, for example, you’ll end up paying an additional $18 for the insurance period, which will be added to your total auto insurance cost.

Each insurance company sets its own payout fee amount, which can range from $1 to $5 or more per payout. If you are shopping for auto insurance quote and plan to make monthly payments, ask the insurance agent how much the installment fee will be so you can decide if the monthly payment is worth it for you.

Lump-sum payments could save money

Even if you’re looking for cheap car insurance with no down payment as a cost-cutting measure, keep in mind that those who can afford to pay their premium in full may end up saving more money than monthly payers. Not only are recurring installment fees avoided, but many insurance companies offer a discount for payment of premiums in a single instalment.

If you want to pay your full premium, budgeting for your annual premium in advance and setting aside the amount for each month in a savings account might make paying in a lump sum more manageable. Then, when your next renewal is due, you can use the amount saved to pay your premium. However, since auto insurance rates continue to rise, you may owe more when your policy renews. It may be worth considering setting aside additional funds to account for an increased premium.

Buy insurance before buying a car

If you’re on a tight budget and want cheap car insurance with a down payment, getting insurance before you buy a car can help you stick to your financial goals.

The make and model of your car is a factor that determines car insurance rates. With an older car, you may be able to forgo full coverage and get cheaper minimum coverage insurance instead if the vehicle is reimbursed. But, some newer cars have advanced safety features that could make them cheaper to insure. Researching insurance quotes can help you decide which car to buy, as well as find the cheapest auto insurance companies providing the coverage you need.

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About Matthew R. Dailey

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