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Cheap No Down Payment Car Insurance

Buying no down payment car insurance seems like a good idea, but it’s not so simple. Here’s the truth about car insurance with no down payment.

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No down payment car insurance sounds like a great option, right? Unfortunately, it doesn’t actually exist, so you’ll have a hard time finding it. Car insurance policies don’t come with a traditional down payment.

When auto insurance companies use the term “no down payment,” they don’t mean you can avoid paying any part of your insurance policy. They just mean you can pay for six months or a year of coverage at once. It’s sort of like a bulk buy discount, where they lower your rate if you pay in one big installment rather than six or 12 separate installments. But that involves a big ‘down payment,’ as you’re paying for the full policy in one go.

Your other option? Pay your regular rate once a month. This will come with a smaller ‘down payment’ – typically just a month of coverage. Occasionally, insurers also charge a few extra fees to start coverage. Either way, you’ll have to pay at least some money when you first purchase your policy. Luckily, there are plenty of other ways to make your car insurance affordable.

How to Get Cheap No Down Payment Car Insurance

Here’s the thing—no down payment auto insurance doesn’t really exist. When you buy car insurance, you’ll have the option to buy the total annual or six-month amount, pay in quarterly installments, or pay monthly.

If you can afford to purchase the entirety of your policy from the get-go, you should do so. Drivers who can afford to pay a larger amount upfront will save money in the long run. If you pay a smaller amount when you initially purchase your insurance, you’ll pay more in monthly premiums over the duration of your policy.

No matter which option you choose, you’ll still have to pay at least some money upfront. When car insurance companies advertise no down payment, that means you won’t have to pay more than the first monthly payment when you purchase your insurance. Insurance companies consider zero down payment policies a risk and don’t even offer it as an option. You’ll need to be prepared to make a financial commitment as soon as you obtain an auto insurance policy.

The cheapest option is usually paying for a six-month policy upfront as opposed to paying month to month. The larger the original payment you put down, the less you’ll pay overall. Putting down a large starting payment isn't an additional cost: it’s a part of your premium that you’ll have to pay at some point. Most insurance companies offer savings for paying upfront, so your annual insurance bill is cheaper if you pay all at once.

Car Insurance Down Payments

Avoiding a car insurance down payment sounds like a great concept. But you’ll have trouble finding a company that offers that option.Insurance companies don't usually ask for a formal down payment, but you will have to put money down to start your policy. It’s usually at least one month’s payment when you first purchase your policy.

We compared the top three insurance companies in the Seattle area and found the average savings when paying for a six-month insurance policy compared to a monthly policy. These are the prices the driver should expect to pay if she paid for the full six months at once as opposed to paying monthly:

  Down Payment Monthly Premium (x5) Total Cost Savings
 Monthly  $126.30      $158.33      $917.95      
 Six-month total upfront      $864.96      $0      $864.96      $52.99    

The policy we analyzed covers a 30-year-old female driving a 2015 Toyota Camry less than 10,000 miles annually in the Seattle metro area. The driver chose:

  • $25,000/$50,000/$10,000 liability insurance (the Washington State minimum)
  • $10,000 of PIP coverage
  • Collision coverage with a $500 deductible
  • Comprehensive coverage with a $500 deductible

If the driver chooses to pay for a six-month policy at once, she will save an average of a 6.13 percent or $52.99. However, that’s the average of three different major insurance companies. Savings vary depending on your insurance company. For example, we found that one company offered no savings for paying for the policy upfront, whereas another offered savings of 17.6 percent. That's why it’s important to compare auto insurance quotes from several insurance companies.

Cheapest Car Insurance Companies

Trying to keep your auto insurance prices low? The insurance company you choose has a to do with how much you’ll have to pay. We’ve compiled the top insurance companies and the monthly rates you should expect to pay for cheap car insurance.

Auto insurance rate data was provided by Quadrant Information Services. Rates are based on a driver profile of a 35-year-old who owns a 2015 Toyota Camry, drives less than 10,000 annual miles, has good credit, has a clean record, and chose the state minimum liability in 10 different states.

Company Average cost (monthly)
 American Family  $50
 Geico  $52
 State Farm  $52
 Progressive  $62
 Nationwide  $68
 Farmers  $70
 Allstate  $86

Our data shows that American Family offers the cheapest auto insurance if you’re paying monthly, and Allstate has the highest monthly rates. However, our driver’s profile may not be reflective of your experience on the road, so your prices could be drastically different.

Some insurers allow you to choose from a several payment options, which will impact your monthly rates. Savings also depend on several factors including your credit score, your location, your driving record, and the type of policy you choose. But drivers can usually expect to pay around five to 10 percent less if they pay the entirety of their six-month policy in advance as opposed to paying month to month. 

How to Save Money on Car Insurance

There are several ways to save money on car insurance. Insurance companies consider several factors while pricing your policy including your age, marital status, driving record, location, and more.

The easiest way to save money on car insurance is by maintaining a clean driving record. Your driving history is the most important factor insurance companies look at to determine your rates. So, if you’re clear of DUIs, speeding tickets, and accidents, you’ll pay much less than someone with a spotty record.

Also, obtaining your state’s minimum insurance coverage is the best way to get the cheapest down payment.

These are some other ways to get cheap car insurance:

  • Defensive driving courses
  • Good student discounts
  • Maintain a good credit score
  • Compare car insurance quotes from different companies
  • Bundle different kinds of insurance with the same company
  • Invest in a car with safety features

I Am a High-Risk Driver. Can I Get No Down Payment Insurance?

All drivers will have to pay at least some money when they first purchase a policy. This could be as low as your first monthly payment or as high as the entire six-month policy at once. It’s up to you which route you want to go. If you have a lousy driving record, you’ll pay more for car insurance. Also, some companies specialize in high-risk insurance.

If I Cancel My Insurance Policy, Will My Down Payment Be Refunded?

If you paid a large lump sum at the initial purchase of your car insurance, you could be entitled to a refund. However, this varies depending on the company and there are exceptions where you will not get your money back. You should contact your insurance provider to find out if you’re eligible for a policy cancellation.

How Much Does A Down Payment for Car Insurance Cost?

Technically, down payments are not an option when it comes to car insurance. However, there is an option to either pay for coverage in a higher amount when you first purchase your policy, or to spread payments from month to month.

The cheapest option is to put as much money down as you can from the beginning, that way your monthly rates are lower. Insurance companies usually offer a percentage of savings to consumers who go this route. Savings range from an average of five to 10 percent in savings for paying for the entire policy at once.

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