Cheap Car Insurance With No Deposit

If you’re shopping for cheap car insurance, an offer of little or no down payment or deposit might be attractive. After all, if you can save money on auto insurance, why not? The truth is that most auto insurance companies require some sort of down payment or deposit. 

Companies that offer cheap, no-deposit car insurance are few and far between but do exist. The catch is that you may end up paying more. So shopping for affordable insurance is really about finding the balance between what you can afford to pay and what you receive in return.

Can I get cheap auto insurance with no down payment?

The simple answer is yes. A few companies offer cheap auto insurance without requiring you to pay anything upfront. Insurers may advertise a product as “buy now, pay later,” “no down payment,” or “no deposit,” but it all basically means the same. Does it really work out cheaper, though?

Most insurance companies charge a deposit or down payment as an expression of good faith. This is usually a percentage of the annual premium and not an extra charge. This practice protects your insurer from drivers who may purchase their first month, so they have proof of insurance but then they default on later payments. Companies that do not charge anything upfront are taking a risk. 

Insurance companies base rates on a risk-to-reward principle, which means the risk is offset some other way. Ultimately, it also means you may end up paying more for “cheap” insurance.

Imagine you are given two quotes for similar policies but with different payment structures. The first seems to be a good deal, costing $1,600 per year to insure your car. But this policy includes a 20% deposit, so you’d have to pay $320 upfront, and your monthly payment is about $107. 

On the other hand, the “buy now, pay later” policy has monthly rates of $150 but requires no down payment or deposit. If you do the math, you end up paying $1,800 per year for this option, which is $200 more than the other. So, in reality, no deposit car insurance can end up being more expensive.

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Is cheap car insurance worth it?

Insurance companies are different, and you’ll need to talk to your agent to determine what you can afford. But often “cheap” insurance doesn’t offer more than basic coverage. 

Each state requires drivers to have basic insurance to drive. But basic insurance only covers damages to the other party and their vehicle in the event of an accident, and only up to a certain amount. The only way to protect yourself and cover all damages, no matter who is at fault, is to purchase full coverage insurance.

Some types of policies that offer increased coverage are:

• Collision coverage. Collision covers the cost of damages to your vehicle if it is involved in most types of collisions.
• Comprehensive coverage. Comprehensive coverage pays for non-collision damages to your vehicle.
• Personal injury or medical coverage. Personal injury protection and medical payments policies cover the medical expenses for the driver and passengers, regardless of who is at fault.

You’ll not likely get full coverage without paying a down payment or deposit, but you can look for ways to lower your rates and get the kind of coverage you want at rates you can afford.

Other Ways to Get Affordable Auto Insurance

Here are some tips on how to help lower your car insurance rates:

• Ask for discounts from your insurer.
• Enroll in safe driving programs.
• Learn other ways to cut down on insurance rates.

Before buying “cheap” insurance, shop and compare to see what coverage is available with rates you can afford that will save you money in the long run.

Should I get cheap car insurance with no deposit?

Cheap car insurance with no deposit doesn’t always work out cheaper in the long run. Do the math when comparing rates to make sure you’re not actually paying more. Consider the long-term benefits of increased coverage if you can afford it, and do what you can to lower your rates so you have increased options. The bottom line is that you can likely find the balance of great coverage at rates you can afford.