How to Find Cheap No Deposit Car Insurance (Pros & Cons)

Payment for no-deposit car insurance is divided into 12 monthly installments. Save up to 20% more on car insurance rates by comparing multiple quotes online.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses...

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Reviewed byJoel Ohman
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UPDATED: Jun 10, 2020

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Here's what you need to know...
  • Car insurance that does not require a deposit often costs more over time
  • There are more companies offering no deposit car insurance than ever before
  • For many people, the pros of not having to include a down payment outweigh the cons


Have you ever gone online and gotten a quote for car insurance, only to find out that you have to put down a large deposit in order to get monthly payments that fit your budget?

This scenario has happened to virtually everyone who has ever looked for cheap car insurance. The good news, however, is cheap, no deposit car insurance is available.

It does seem underhanded to receive a quote for a rate, only to learn that you have to deposit two or three months’ worth of money to qualify for that price.

In some cases, if you don’t have the deposit, then you cannot purchase the insurance.

For a long time, nearly every car insurance company required a deposit to purchase insurance. There were even some that didn’t accept payments at all and required you to pay six months in advance.

Enter your zip code now to receive cheap, no deposit car insurance quotes from multiple companies today!

Today, however, there are a lot more insurance companies to choose from. Car insurance companies have to offer more things to appeal to potential customers. One benefit that most insurance companies are offering today is a flexible payment option.

Many insurance companies now allow you to pay monthly, quarterly, twice a year or once a year. This flexibility makes buying auto insurance more affordable for many people. However, your car insurance company may charge you up to an extra $10/mo.

Pros to Buying No Deposit Car Insurance

One of the biggest benefits to buying cheap, no deposit car insurance is that it makes the payments more manageable.

If you can find cheap insurance, you can afford to purchase the coverage that you need.

Another benefit is that, when you are presented with a quote that shows your monthly premiums, you know that this is all you are going to need. For example, if your monthly premium is quoted at $65, then you won’t need $130 to start your policy.

There is less confusion when you purchase a cheap, no deposit car insurance policy. At the beginning of every month, you pay the premium to cover that month. Once the premium is paid, you don’t owe another dime for the rest of the month.

This type of payment structure also helps if you decide to change car insurance companies. You don’t have to figure out where you are in your policy because your first day each month starts on the day that you pay your bill.

Lastly, most companies that allow you to pay monthly will also draw your payment out of your bank account for you. This option may not be a plus for everyone, but for many people, not having to think about when that bill is due can be quite a relief.

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Cons to Buying No Deposit Car Insurance

Sometimes cheap is just that — cheap. In some cases, you get what you pay for, and you could end up buying an insurance policy from a company with a lot of hidden fees.

What’s more, some companies place a clause in their policy that they can raise your rates if they deem your initial application to be incorrect, which can lead to higher rates than initially expected.

Another downside is, when you don’t pay a deposit, you usually pay more for your monthly premiums. While typically you will spend $30 to $40 more every six months for the no deposit monthly payment option, for many people this could make the difference in what they can afford.

When you choose a cheap, no deposit car insurance plan, most insurance companies require you to pay directly from your bank account, which negates the risk of defaulting on a payment.

For many people, this would be a plus; for some, however, it’s negative because it offers no wiggle room if you are short on your premiums for the month.

Some people don’t like to give any company access to their bank account for direct withdrawal because this leaves them vulnerable to payment mistakes.

For example, there is the possibility that the computer doesn’t see a payment and it withdraws the payment twice. Or, if you cancel your account, if it isn’t updated quickly enough, the insurance company may withdraw the payment even if you are no longer a customer.

While these things don’t happen to everyone, it is an unfortunate fact that it happens far too often.

Some insurance companies will allow you to pay with direct bill pay, which means you control the transactions rather than the insurance companies, but most won’t if you choose the no deposit option.

In some cases, if you choose no deposit car insurance, your rates will increase more often.

The reason for this is that these companies renew your policy every six months instead of once a year. Any changing risk factors in your area or any claims that you have made will affect your insurance costs faster.

By the same token, this also means if the risk factors change for the better, and you don’t have any claims, you could pay less money sooner as well. That means this can qualify for a pro if you are an excellent driver with no claims on your account!

For many people, the pros outweigh the cons. There is a way for them to purchase auto insurance without having to pay hundreds of dollars up-front. That is why so many people are willing to pay a little more over time to avoid parting with so much money in a single transaction.

Where to Purchase No Deposit Car Insurance

Finding less expensive auto insurance is easy these days with the Internet, especially with the advent of free quote tools.

With quote tools, you can compare the cost of several insurance companies all in a single location. However, an area where quote tools may not be able to help narrow down your choices between no deposit car insurance companies and car insurance companies that do require a deposit.

The good news is that it doesn’t matter if the quote tool that you use can manage this for you because it is easy enough to check. You can do the math yourself by checking your total premium with the quoted monthly premium.

Another way to do this is to select simply the link to the insurance company you are considering to see what it says on their website.

The great thing about using a quote tool is that your information is saved so you can go right back to it if you aren’t happy with the insurance company you are investigating. You don’t have to start over either; all of your information is still there.

While it is completely your decision about whether to choose a cheap no deposit car insurance or a cheap car insurance that requires a deposit, you should start right here by using our free quote tool.

Enter your zip code now to compare car insurance quotes from top companies in your area!

Car Insurance with No Deposit

If you want to buy car insurance with no deposit, find a company that will let you make monthly payment installments. You’ll be charged for paying monthly.

  • In most cases, you must have a monthly payment plan to find insurance without a deposit
  • The drawbacks to this are higher costs for processing fees and the possibility of losing coverage at the last minute
  • You are better off choosing a plan that allows you to pay a few times over the course of a year

Buying car insurance with no deposit can be tricky, especially if your credit is not good.

However, it is possible to do by finding an insurance company that will accept a pay-as-you-go payment plan.

Enter your ZIP code to compare free car insurance quotes from multiple companies today.

Car insurance is usually purchased in six month or annual terms. Since you can almost always cancel a car insurance policy at any time, this is usually the preferred route to ensure you have insurance on a regular basis.

Paying monthly is too risky, leaving you open to being without insurance due to a forgotten payment or simply not getting renewed the next month.

Most car insurance companies will review and rate your credit report as part of the application process.

If you have never had car insurance before, or you have a poor credit history, the car insurance company will most likely consider you to be a higher-risk applicant.

This can cause your premiums to be higher or require you to need a large deposit upfront.

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Is there such a thing as no deposit car insurance?

If you want to buy car insurance with no deposit, then you’ll need to find an insurance company that will allow you to make monthly payment installments.

In this scenario, you may need to pay one month in advance in order to ensure that the car insurance company has the premium before the next month’s coverage begins.

By paying one month in advance, you will always be assured to have coverage.

If you pay for your August Insurance in July and have an accident in August, then you are covered.

If you don’t pay for August until sometime in August and you have an accident that same month, then there could be a question as to whether the accident is an insurable event.

Some dangers with paying month-to-month are:

  • Forgetting to pay your bill in a timely fashion
  • Losing a check in the mail
  • The insurance company failing to process your payment

If you decide to buy car insurance with no deposit and get a month-to-month payment plan, then you need to make sure your payments are made and processed every month.

You may also be charged a maintenance fee for a monthly payment plan, which is an additional expense.

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How Credit Reports Determine Car Insurance Rates

Some people may not be aware that their credit score actually plays an important role in determining car insurance rates. It can also impact the amount of a deposit that you may need in order to secure your car insurance policy.

Car insurance companies decide on your car insurance rate based on several factors, including:

  • Your driving record
  • your age
  • your marital status
  • the make and model of your car
  • where you work
  • where you live

Many states also allow car insurance companies to use your credit report as another deciding factor.

If your credit score is low, then the car insurance company may consider you to be a risk and raise your rate or demand a higher insurance deposit.

Statistics generalize people with low credit scores to be less responsible than people with high credit scores. Because of this, insurance companies consider individuals with low credit scores to be a higher risk for insurance claims.

Additionally, if you have a credit report with a poor payment history, the car insurance company may charge you more money.

Granted, if you don’t make your insurance payment you simply won’t have insurance.

However, it is more work to track payments and chase debt, so you may be penalized for this in advance.

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What is a car insurance down payment?

If you can buy car insurance with no down payment and avoid monthly payments, then that would be the best approach.

By purchasing car insurance for a six-month term or an annual term, you lock in your rate and assure you have car insurance for that length of time.

On a monthly plan, if your car insurance company decides not to renew you the next month or raises your premium, then you may be scrambling for a new car insurance company.

You can also avoid paying monthly maintenance fees by getting a longer-term contract.

Usually, an annual term can be paid off in two or three payments during the course of the year, and you’ll only be charged a nominal amount for administrative costs.

Since you need car insurance to drive, you will have to buy the plan for which you are approved.

Whether you qualify for car insurance with no deposit or with a deposit, you can enter your ZIP code to start comparing car insurance rates right now.

Do I have to pay for car insurance upfront?

  • A car insurance quote isn’t binding and doesn’t provide any type of protection to the person who requested it
  • Once an application for coverage is submitted, coverage may be afforded until the information has been fully underwritten
  • In order for a claim to be covered during this underwriting period, a payment must be submitted
  • Some companies will only charge for the first month’s premium to start a policy while others will charge a down payment
  • It’s important to review the payment options before selecting a policy if you’re looking for flexibility
  • If you’re a high-risk driver or you have a low credit-based insurance score, there’s a good chance that you’ll be asked to put down money to secure coverage

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When you buy auto insurance, you’re billed for the coverage that you select before the coverage is actually afforded.

Since you pay in advance for your liability and sometimes physical damage coverage, you have peace of mind in knowing that any future claims that you file during that period will be covered. Unfortunately, things aren’t so cut and dry when it comes to paying for a policy at the time of inception.

Consumers have the right to compare auto insurance rate quotes for free. Since they don’t have to pay to look at the rates from insurer to insurer, it’s a very competitive marketplace.

When that consumer goes from quoting coverage to applying for it, it’s time for the tender. Companies will ask all serious applicants to provide their initial payment upfront when they submit their application.

How much the company asks for depends upon your rates, the state, and the company’s policy as it pertains to down payments.

Start comparing car insurance rates now by using our FREE tool above!

Why are auto insurance rates charged in advance?

Whether you pay for the entire year or you choose to pay in installments, you’re paying for coverage that will be provided in the weeks or months to come and not in the months that have recently passed.

This is because insurance is a unique product. Unlike a cable contract that you use every month, insurance is a contract that you hope not to put to use.

If you don’t have a claim, it’s nothing more than a piece of paper saying that the company will have your back in the future if you need them.

The only way for the company to protect itself is to collect money for coverage dates before they come. There will be no issues regarding backdated claims and no collections notices because of missing payments.

If the policy isn’t paid within the time allotted for the grace period, the coverage cancels and the insurer is no longer on the hook.

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Once a quote is given is coverage afforded?

A quote isn’t binding. It’s nothing more than an estimate that shows a prospective policyholder how much they’d pay for insurance with a specific company.

By using the personal information, the company is able to tell you how much you will pay for an entire term of coverage as long as you were honest and forthcoming.

When is an application binding?

After you compare quotes, you will then need to decide which company you’ll proceed with. When you proceed you enter the application stage of the process.

This is where you must provide accurate information and sign disclosures so that the company is able to verify your driving record and credit record.

In addition to providing details on your driving record and driving history, you’ll be asked to submit your initial payment. An application isn’t actually submitted until you submit a minimum payment amount that’s required by the carrier.

This is because auto insurance is a contract and for that contract to be valid consideration, also known as money, must be collected.

When the payment is submitted and the application is in the hands of the underwriting department, you will have coverage against losses.

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How much consideration is due to bind coverage?

How much you must pay when you’re starting a policy depends on a few different factors. Years ago, most insurers would charge their customers a down payment for insurance.

This down payment would cover the costs to underwrite and process an application so that the insurer wouldn’t suffer a loss if the customer canceled the policy.

Now, down payments aren’t always required. If they are, the state will dictate how much a company can require that someone pays. Here are some factors that can affect whether or not a down payment will be requested:

  • The carrier that you’re buying from
  • Whether or not you’re a high-risk driver
  • If the company typically does business in the high-risk market
  • If you’re doing business with a brokerage
  • Your credit record if you’re in a state where insurers can run credit
  • If you want to pay the policy in full
  • State requirements

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What is the most common down payment option?

If you can’t afford to pay in full or quarterly, you should have more than a monthly payment available to start your policy.

The most common down payment requirement for 6-month policies with standard insurers is the 5 Pay Plan.

Under the 5 Pay Plan, you’ll pay the first and last month down. You’ll then pay 4 installments and you won’t have a monthly payment the last month because you paid the fee at startup.

Not having the payment at the end of the term is something many clients look forward to.

What payment methods are accepted for a down payment?

You can pay your initial payment in a number of different ways. Most insurance companies accept payments by credit or debit card as long as the card is in your name.

If someone else is paying your premiums, you’ll need their authorization before you can run the card.

If you’re going to have the payments automatically drafted from your account, you’ll need a canceled check. This will show your routing and account number so that you can set up the EFT draft.

Just be sure to cancel that draft if you ever decide to leave the carrier.

Remember the Binding Period

Insurance companies in a majority of states have a 60-day binding period to review the risk that they have taken on. During this time, the insurer can modify the rates or even terminate the policy.

It’s most common for a company to order a cancellation when the applicant wasn’t honest.

If this happens and the policy goes through a rescission, here the cancellation is backdated and the entire premium that you paid will be returned.

You do have to pay for your premiums upfront. How much you’ll need to pay can vary. Be sure to compare auto insurance quotes to find the best rates before you apply.

After using an online comparison shopping tool, proceed with an application and choose a payment method that works for you. Enter your zip code in our FREE tool below to start comparing car insurance rates now!

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How to Find No Deposit Car Insurance Quotes

Payment for no-deposit car insurance is divided into 12 monthly installments. Save up to 20% more on car insurance rates by comparing multiple quotes online.

  • There are no deposit car insurance policies out there. Compare them to find the one best suited to your needs
  • Be sure to evaluate the reputation and claims processing history of a company before you choose them. There’s more to insurance than premiums
  • Search online for quotes and then compare the companies on your short list side by side

People who need car insurance can usually find no deposit insurance policies. They are very beneficial for customers who are having cash difficulties when they apply for coverage.

With the current state of the economy, drivers often find it tough to pay for deposits on insurance policies in advance. Many people are looking for a no deposit insurance policy to get their car insured fast.

We can help you find no deposit car insurance. Enter your ZIP code now for FREE car insurance quotes.

No Deposit Car Insurance

Some companies offer no down payment insurance as an alternative way to get car insurance while many others require advance payment for insurance policies.

Deposits on insurance policies are often required because these policies are legally binding contracts. Insurance companies want to make sure that consumers hold up their end of the deal.

It is difficult for many car insurance companies to stay profitable in the insurance market nowadays. Because of this, some companies want to reach a broader client base and provide car insurance without advance deposits to give consumers an option for a better cash flexibility.

Payment for these car insurance policies is divided into 12 monthly installments, and the coverage starts when the first monthly payment is made.

To receive auto insurance without a deposit, it is important to get a few quotes for no deposit car insurance. These quotes are easy to find on the Internet these days.

It is a good idea to compare insurance companies online and choose a company that will suit individual consumer needs. There are a few steps that people may take to find the right no deposit car insurance quotes.

  • Look Online – Drivers can search for the best quotes on car insurance policies with no advanced deposits online. Consumers should look for insurance policies that will suit their needs and financial capacity.
  • Evaluate Reputation – Once a consumer has found suitable no deposit car insurance policies, it is a good idea to learn more about the insurance providers. It is important to get an idea of how individual insurance companies do business. Finding a company with a solid reputation in the insurance industry is essential.
  • Examine Claims Process – People need to ask about the process of filing claims after automobile accidents. It is also vital to know how long the filing process will take. Insurance companies should manage consumer claims in a timely manner.
  • Ask People – Sometimes, asking family, friends and even co-workers is a great way to find the best no deposit car insurance quotes. Mechanics at car repair shops are also good people to ask. They encounter clients who have had positive and negative experiences with insurance companies.

Choose the Best Car Insurance

When searching for car insurance, consumers should always choose the policy that will suit their needs best. They should see to it that the insurance agent or representative are able to answer all their questions about insurance policies and coverage.

It is crucial for drivers to use a car insurance comparison chart to compare policies from car insurance companies after they have obtained quotes.

Popular car insurance providers do not always provide good quotes for no deposit car insurance. It is often best to choose smaller insurance companies if that’s what you’re looking for.

The Cheapest Car Insurance Policy is Not Always Best

Consumers should always remember that getting the cheapest no deposit car insurance premium does not automatically mean that they will get the best value in their car insurance coverage.

Consumers should always get at least three auto insurance quotes from three different car insurance companies. Compare these quotes and look further into what is covered in the policies.

Consumers should be aware of:

  • the coverage type
  • the monthly premiums
  • the deductibles
  • what is not included in the policy

There are many sites online that will help consumers obtain and compare quotes for no deposit car insurance. With this, car insurance consumers will be able to find insurance companies that they may want to deal with.

Many sites online also provide reviews of car insurance companies. Former and current customers that have dealt with particular car insurance companies use these sites to provide feedback about their experiences.

Although people should be cautious when reading these reviews, consumers can use this information to help weigh all of their choices before making a final decision.

It is important to compare multiple insurance providers when reviewing and comparing no deposit car insurance policies. Getting the most reliable no down payment car insurance policy is easy when consumers have all of the right information.

After receiving multiple quotes, the consumer can narrow down a few option and do one-on-one comparisons of no down payment car insurance to see what is covered by particular policies that they may be considering.

Enter your ZIP code in our car insurance comparison tool below for FREE car insurance quotes!

References:

  1. http://www.entrepreneur.com/article/204932
  2. http://www.nytimes.com/2008/08/30/business/yourmoney/30money.html?_r=0
  3. https://en.wikipedia.org/wiki/Auto_insurance_risk_selection

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