Cheapest Car Insurance With No Down Payment

Key Points:

• You need to pay at least the first month’s premium to start a car insurance policy.
• The cheapest minimum-coverage insurance can start as low as $28 per month.
• Compare multiple companies to find coverage with a low down payment.

You can pay for a car insurance policy in one lump sum or break it into payments, but there’s no option to get insurance without making some type of payment on day one. In other words, no-down-payment car insurance doesn’t actually exist. Car insurance companies won’t take on the risk of covering you for an accident without at least one month’s payment.

We’ll take a closer look at your options in this article. We’ve researched the best car insurance providers and looked at the coverage they offer, their rates, and their customer reviews. We recommend getting several free quotes before you make your decision.

Can You Get Car Insurance With No Down Payment?

As we mentioned above, you’ll always have to pay something to start a car insurance policy. So, in that sense, there isn’t an option for no money down. However, you can choose whether to pay for the full policy, make quarterly payments, or pay for just one month up front.

Why Does Car Insurance Require A Down Payment?

There are a few reasons companies don’t offer no-deposit or no-down-payment auto insurance. The big reason is companies take on risk by covering you. They require some payment upfront to begin coverage.

Companies also require payment to deter people who would purchase car insurance just for a few days to register a vehicle and then cancel. A customer who doesn’t intend to keep car insurance isn’t a customer the company wants. An insurer spends money to get a prospective customer’s driving record (and, in many cases, credit report) and pay its employees to process the application.

The company loses money if it doesn’t receive a down payment and the customer cancels the policy. Since auto insurance companies want long-term customers, they require some level of payment to start a policy.

What Is A Down Payment?

A down payment is not an extra fee added to the premium – it’s included in the total cost of insurance. Think of “down payment” and “first payment” as meaning the same thing in this case. The amount of the down payment is included in the overall six-month or annual premium. Insurance companies may require different down payment amounts, and some allow customers to choose the size of their down payment.

Insurance companies often give policyholders who pay the entire premium up front a break on the total cost of coverage. The discount depends on many factors, such as:

• Type of vehicle insured
• Length of the policy
• Driver’s ZIP code and driving record
• Customer’s credit history

How Much Is A Car Insurance Down Payment?

Down payment amounts vary depending on the insurance company, your rate, and the policy. Our research shows drivers can find minimum-coverage insurance for about $53 per month on average. A down payment can be as low as this amount. Similarly, full-coverage insurance costs about $144 per month on average, and that could be what you pay to start a policy.

You might have to pay a higher down payment depending on your situation, though. This could be the case if you have a poor driving record or bad credit. Car insurance companies may charge high-risk drivers higher down payments, in other words.

What Payment Options Do You Have?

Most major companies offer the option to pay monthly or pay for a policy in full. The policy period may be six or twelve months long. The initial payment may be slightly higher than the rest, depending on the plan and vehicle.

What Companies Have The Cheapest Rates?

While you have to pay something to get an auto insurance policy, you may be able to find cheap rates by comparing companies. At any given time, you can find quotes that are hundreds of dollars apart. That’s why it’s important to look at multiple providers for quotes.

Cheapest Car Insurance Companies For Minimum Coverage

According to our cost data, drivers pay about $635 per year or $53 per month on average for minimum coverage. That said, some companies offer cheaper auto insurance rates than these on average, including USAA, Auto-Owners, and Erie. Below, you can see the 10 cheapest companies for minimum coverage insurance.

These rate averages apply to 35-year-old drivers with good driving records and good credit.

*USAA is only available to military members, veterans, and their spouses and children.

Cheapest Car Insurance Providers For Full Coverage

Our team found that the average good driver pays about $1,730 per year or $144 per month on average for full-coverage car insurance. Many companies offer cheaper average rates, though, including USAA, Erie, and Nationwide. Below are the 10 cheapest companies for full-coverage insurance.

What Factors Affect Car Insurance Rates

An auto insurer will look at many factors to set your premiums. Here are some of the most common factors that influence your rates.

• Vehicle: The type of car you have is one of the most important criteria. Insurance companies consider how likely your vehicle is to be stolen, as well as safety ratings since some vehicles are more likely to be involved in accidents or cost more to repair than others.
• Location: Where you live can have a significant impact on your insurance premiums because accidents and vehicle theft are more common in some ZIP codes than others.
• Age and gender: Your age and gender can affect your average car insurance payment. Studies have found that those factors can influence a driver’s likelihood of getting into an accident. For example, adults tend to be safer drivers than teenagers. Customers who belong to groups that are regarded as less risky drivers are often quoted lower rates.
• Driving history: If you have a clean driving record, you’ll find the best rates. On the other hand, you’ll pay more for insurance if you have tickets, at-fault accidents, or other infractions on your record.
• Driving habits: The more often you drive and the farther you travel, the higher your chance of being involved in an accident. If you don’t drive much, you may be charged lower insurance premiums.
• Credit scores: In most states, insurance companies take a person’s credit history into account when setting premiums. Credit can’t be considered when setting car insurance rates in California, Massachusetts, Hawaii, or Michigan.

How To Get Cheap Auto Insurance

There are a few things you can do to find a cheap monthly rate and the smallest down payment for car insurance. You can pick the right coverage, look for discounts, and work on your credit score.

Choose The Right Coverage

Talk to an insurance representative about the types of auto insurance coverage you need, the amount of coverage you should choose, and possible changes you could make to your current policy to save money. For example, if you have an older vehicle that isn’t worth much, it probably doesn’t make sense to pay for collision and comprehensive car insurance coverage.

If you lease your car or have an outstanding auto loan, however, you may be required to maintain full-coverage auto insurance until the lease term ends or the loan is paid off.

Increase Your Deductible

Raising your deductible may reduce your premiums quite a bit. This is the amount of money you need to pay out of pocket before the insurance company will provide funds to settle a claim. When a policyholder assumes more of the financial responsibility for any claims that might be filed, that reduces the risk shouldered by the insurance company.

Drive Safely

In most cases, filing a claim will raise your rates, and the increased premiums may continue for several years. Driving safely and responsibly can reduce your likelihood of getting into an accident and having to use your insurance, which can keep your premiums down.

Work On Your Credit Score

If you live in a state where your credit score can influence your car insurance premiums, focus on paying your bills on time. That can raise your credit score, which can help you get lower insurance premiums.

Look For Car Insurance Discounts

Insurance companies offer several types of discounts to help customers save money. You may save on car insurance if you qualify for a discount for one or more of these reasons:

• Having a safe driving record (no accidents within a certain period of time)
• Being a good student
• Operating a vehicle equipped with certain safety features
• Insuring more than one vehicle with the same company
• Purchasing multiple policies, such as auto, homeowners/renters, and life insurance, through the same company (also known as bundling)
• Being a current member of the military or a veteran
• Belonging to certain professional groups or affiliated organizations
• Using auto-pay
• Receiving electronic statements

Since rates are based on so many factors, no provider offers the cheapest car insurance across the board. A company that offers low rates to someone in another state may charge much more where you live.

The only way to find out which company is the best fit for your budget is to shop around and compare car insurance quotes from several insurers.

Avoid Costly Mistakes If You Can’t Afford Car Insurance

If you can’t cover the cost of auto insurance, then don’t drive while uninsured. If you cause an accident while driving without insurance, you can be held responsible for repairs to the other driver’s car, plus medical bills and legal fees.

If you stop paying your car insurance premiums, your policy will lapse. That can lead to problems even if you don’t get involved in an accident. For starters, your driver’s license and/or vehicle registration can be suspended, and you may have to file an SR-22. If your financial situation improves and you want to buy a car insurance policy later, you may be denied coverage or have to pay higher car insurance costs because you let your previous policy lapse.

No Down Payment Car Insurance: Conclusion

While car insurance with no down payment doesn’t exist, you can get affordable rates by choosing a monthly payment plan and shopping from cheap providers. Compare three companies when you shop to find low-deposit car insurance.

Top Recommendations For Auto Insurance

We’ve researched many top-rated car insurance companies, and these are a handful that ranked highest in terms of customer service, affordability, and coverage. The providers below are great options for affordable car insurance.

USAA Insurance: Best For Military Members

We rate USAA 4.6 out of 5.0 stars. If you or someone in your family is a current or former member of the military, check out USAA car insurance. The insurer scores highly nationwide in the J.D. Power 2022 U.S. Auto Insurance Study℠. In many states, USAA offers lower rates than any of its competitors.

For more information, read our USAA auto insurance review.

Geico Insurance: Best For Discounts

Our team rates Geico 4.6 out of 5.0 stars. Based on our research, we consider Geico the best car insurance company for discounts. Geico ranked above average in the J.D. Power 2022 U.S. Auto Claims Satisfaction Study℠.

For more information, read our Geico auto insurance review.

State Farm Insurance: Best Overall Provider

We give State Farm 4.7 out of 5.0 stars. State Farm auto insurance also ranked highly in the J.D. Power Claims Satisfaction Study. State Farm offers several apps to help consumers manage their policies and submit claims. Policyholders can also use an app to track their driving habits and another to complete driving courses that can help them qualify for discounts.

Read our State Farm auto insurance review for more.

Cheap Car Insurance With No Down Payment: FAQ

Below are a few frequently asked questions on the cheapest car insurance without a down payment.

How We Rate Insurers

Our review process aims to deliver consistent and unbiased assessments of car insurance providers. While there are multiple qualities that make a car insurance company successful, our review team focuses on those we believe are the most important for consumers:

• Cost: Cost can be difficult to compare between insurers because so many factors impact annual insurance premiums. The cheapest insurer for one driver may not be the cheapest for another. To determine our cost score, we look at insurance rate estimates generated by Quadrant Information Services, discount opportunities, and consumer reports.

• Coverage: To determine our coverage score, we look at the number of coverage options available as well as coverage limits and deductible options. Our ratings also take into account additional services and benefits like roadside assistance.

• Reliability: It’s important that an auto insurer is able to meet its claims obligations. Companies with a strong financial strength rating from AM Best score best in this category. Established insurers with a long history of reliable service also receive positive marks.

• Service: We comb through customer reviews on sites like the Better Business Bureau (BBB) to learn about customer experiences. Insurers with a low volume of complaints score well in this area. We also consider the claims process, giving higher ratings to car insurance providers that offer easy-to-use claims apps.

*Data accurate at time of publication.