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

No deposit car insurance makes payments more manageable, allowing you to pay monthly, quarterly, or twice or once a year. However, no deposit car insurance policies cost more in the long run. Some companies won't allow you to start a car insurance policy without a deposit. Compare multiple companies and shop around to find the best no deposit car insurance 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 University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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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. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 14, 2021

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Here's what you need to know...

  • Car insurance that does not require a deposit costs more over time.
  • More companies are 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 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 is cheap, no deposit car insurance is available.

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

What is no deposit car insurance?

As the name suggests, no deposit car insurance allows you to get car insurance without paying money down when you sign up for a policy. You wait until the due date next month to make your first payment. However, your car insurance rates will be more expensive.

Pros of Buying No Deposit Car Insurance

One of the biggest benefits of 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 will know that this is all you will need. For example, if your monthly premium is quoted at $65, you won’t need $130 to start your policy.

There is less confusion when you purchase cheap, no deposit car insurance and pay monthly. 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 the first day of each month starts when 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.

Cons of 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 to 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. Typically, you will spend $30 to $40 more every six months for the no deposit monthly payment option.

For many people, this could make a 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 and it isn’t updated quickly enough, the insurance company may extract 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.

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

If the risk factors change for the better and you don’t have any claims, you could pay less money sooner. This means you can qualify for benefits if you are an excellent driver with no claims on your account. Here’s an example of how claims can affect your car insurance costs.

Car Insurance Rates Increase After Claims
Car Insurance Increase SummaryCar Insurance Rates Increase
Increase at Six Months+$384
Increase at 12 Months+$767
Increase at Three Years+$2,301
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For many people, the pros outweigh the cons. There is a way for them to purchase car 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.

Who can get no deposit car insurance?

Anyone can get no deposit car insurance. The best way you can get no deposit car insurance is to have a clean driving record and a good credit score.

According to Experian, the credit score correlates to a consumer’s level of risk in car insurance.

No deposit car insurance is also available for those who may not have enough money to cover the deposit’s cost. It could cost more, but you may skip the deposit if an agent finds you eligible.

How Signing Up for No Deposit Car Insurance Works

Purchasing no deposit car insurance is just like any other policy that you get. However, you’ll skip the part where you’re supposed to deposit money on your car insurance policy.

The next month you can make your first payment. However, it could be more expensive than average.

Here’s an example of how no deposit car insurance can affect your car insurance rates per month.

Monthly No Deposit Car Insurance Compared to Deposit Car Insurance
Down Payment Amount on Six-Month Car Insurance Rate Worth $800Average Monthly Car Insurance Rates
0%$133
10% or $80$120
20% or $160$107
30% or $240$93
Get Your Rates Quote Now

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What does this data mean? The data shows that a no deposit car insurance policy will produce higher monthly premiums. Any deposits you make on your car insurance policy will reduce your monthly payments.

The more you deposit, the cheaper your car insurance costs will be per month.

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Where to Purchase No Deposit Car Insurance

Finding less expensive car 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, one area where quote tools may not be able to help you narrow down your choices is 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 you use can manage this because it’s easy and quick 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 simply select 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 to go right back to 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 entirely your decision to choose a cheap, no deposit car insurance or cheap car insurance that requires a deposit, you should start right here by using our free quote tool.

What to Look For When Shopping for No Deposit Car Insurance

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 a year.

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

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

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 regularly.

Paying monthly rates 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 have a poor credit history, the car insurance company will most likely consider hiring a higher-risk applicant.

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

Is there really 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 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, 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 about 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 fails to process your payment

If you decide to buy car insurance with no deposit and get a month-to-month payment plan, 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.

If you’re concerned about no deposit car insurance schemes, rest assured the insurance market is strictly regulated.

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How Credit Reports Determine Car Insurance Rates

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

The best auto insurance companies decide 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.

If your credit report is tied to 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 that you may be penalized for this in advance.

What is a car insurance down payment?

If you can buy no deposit car insurance with no down payment and avoid monthly payments, this 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 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.

Do I have to pay for car insurance upfront?

Some car insurance companies will ask for a deposit no matter what. When you buy car insurance, you’re billed for the coverage you select before the coverage is afforded.

  • 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.
  • 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.

Since you pay in advance for your liability and sometimes physical damage coverage, you have peace of mind knowing that any future claims 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 car 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.

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Why are car 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.

Are no deposit car insurance quotes binding?

A quote isn’t binding. That means you’re welcome to get another quote from another company. Getting a car insurance quote doesn’t mean you have to buy a policy with that particular company.

It’s nothing more than an estimate that shows a prospective policyholder how much they’d pay for insurance with a specific company.

Using personal information, the company can tell you how much you will pay for an entire term of coverage as long as you are 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 can 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 submitted until you submit a minimum payment amount that’s required by the carrier.

This is because car insurance is a contract, and for that contract to be a valid consideration, 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 binding 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

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 six-month policies with standard insurers is the Five Pay Plan.

Under the Five Pay Plan, you’ll pay the first and last month down. You’ll then pay four 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 several 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.

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Remember the Binding Period

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

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

If this happens and the policy goes through a rescission, 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 car 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.

How to Find Cheap 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 shortlist 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.

How to Get Very Cheap Car Insurance with No Deposit

Some companies provide no down payment car 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. Therefore, some companies want to reach a broader client base and provide car insurance without advance deposits to give consumers an option for 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.

You can receive car insurance without a deposit, but it’s important to get a few quotes for no deposit car insurance. These quotes are easy to find on the internet these days.

It is good to compare insurance companies online and choose a company that will suit individual consumer needs. Here 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 on time.
  • 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.

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How to Save Money with the Cheapest Car Insurance Companies

Saving money with cheap, no deposit car insurance is possible and easy to do under the right circumstances.

There are a lot more insurance companies to choose from. The best car insurance companies have to offer more things to appeal to potential customers. One benefit that most insurance companies are providing 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 car insurance more affordable for many people. However, your car insurance company may charge you up to an extra $10 per month.

Choose the Best Car Insurance Companies

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

Drivers should use a car insurance comparison chart to compare policies from the best 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. Let’s examine the top car insurance companies’ cost to give you an idea of what you’ll pay with no deposit.

Average Car Insurance Rates of the Top Ten Car Insurance Companies
CompanyAverage Annual Car Insurance RatesAverage Six-Month Car Insurance RatesAverage Monthly Car Insurance Rates
USAA$2,537$1,269$211
GEICO$3,214$1,607$268
State Farm$3,260$1,630$272
American Family$3,443$1,722$287
Nationwide$3,450$1,725$288
Progressive$4,036$2,018$336
Farmers$4,194$2,097$350
Travelers$4,435$2,218$370
Allstate$4,888$2,444$407
Liberty Mutual$6,073$3,037$506
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The best car insurance companies show that you’ll pay between $211 to $506 per month. What if you deposited money on your car insurance policy? You could knock off a few more dollars per month.

If you’re unable to deposit, don’t worry. Car insurance discounts can always cut expensive costs.

Here’s a list of discounts that you should ask about if you want to decrease your car insurance costs:

  • Good driver discount
  • Student discount
  • Paperless discount
  • Multi-policy discount
  • Payment by bank account
  • Paid-in-full discount
  • Multi-vehicle discount
  • Telematics and Usage-Based Car Insurance programs
  • In-vehicle safety devices

Use discounts to your advantage. Be sure to compare different companies to get the most discounts and to lower car insurance prices.

The Cheapest Car Insurance Policy is Not Always Best

Consumers should always remember that 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 car 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 affordable no deposit car insurance. With this, car insurance consumers will be able to find the insurance companies they want.

No Deposit Car Insurance Liability-Only and Deductible Rates
Coverage and DeductiblesAverage Monthly Car Insurance RatesAverage Six-Month Car Insurance RatesAverage Annual Car Insurance Rates
Liability-only$60$360$720
$500 deductible$129$774$1,548
$1,000 deductible$114$686$1,368
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Higher deductibles produce cheaper car insurance rates. Liability-only produces the cheapest car insurance rates, but the coverage is minimal.

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 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 options and make one-on-one comparisons of no down payment car insurance to see what is covered by the particular policies they may be considering.

No Deposit Car Insurance: The Bottom Line

Depending on the company, you could get no deposit car insurance. Getting no deposit car insurance may depend on specific conditions, but it’s more expensive in the long term.

It does seem underhanded to receive a quote for a car insurance 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 companies that didn’t accept payments at all and required you to pay six months in advance.

Enter your ZIP code in our car insurance comparison tool below for FREE no deposit car insurance quotes.

Frequently Asked Questions: No Deposit Car Insurance

Before we close out this article, let’s answer a few frequently asked questions.

#1 – Can I get car insurance with no money down?

Yes. However, some car insurance companies won’t allow you to get an insurance policy without a deposit. For companies that allow no money down, your car insurance rates are higher than average per month.

#2 – Is no deposit car insurance right for you?

That would depend on your financial situation. Sometimes, no deposit car insurance is helpful when you can’t put a lot of money down.

#3 – Who has the cheapest no deposit car insurance rates?

According to our research, USAA and GEICO are the cheapest companies for no deposit car insurance.

#4 – How much is a down payment for car insurance?

A car insurance down payment costs between eight and 33 percent of the insurance policy.

If you have a policy worth $1,500 for the year, you could pay between $120 and $495. This will decrease your monthly payments during the car insurance policy. Paying a policy in full at the start of the policy will save you five to 10 percent on car insurance.

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Average Monthly Car Insurance Rates by State