The Truth About Zero Down Car Insurance

Zero down car insurance simply spreads the cost of the entire policy across 6 or 12 months. Zero down insurance generally costs about $100 a year more than typical coverage.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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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: May 25, 2020

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Here's what you need to know...

  • Traditional car insurance policies require several hundred dollars up front while a zero down policy does not
  • Zero down car insurance policies still require monthly payments regardless of your income
  • Usually you will end up paying more for a zero down car insurance policy than a regular insurance policy

In today’s car insurance wars the various players are constantly coming up with new pitches, like zero down car insurance, to win new customers.

Some of these pitches are legit while others are somewhat deceptive.

Consumers with limited finances often fall prey to these sales pitches without truly understanding what they’re getting into.

If you’re considering looking for a zero down policy, it’s important for you to know what it’s all about.

To start searching for online car insurance rates, just enter your ZIP code below.

Can you get car insurance with no money down?

The phrase zero down is really a misnomer when it comes to car insurance. Car insurance is a contractual obligation between car owner and insurance provider which requires the exchange of money.

Can you get insurance and pay later? It is highly unlikely that any car insurance provider would cover your vehicle and allow you to drive without collecting at least a nominal fee.

Purchasing zero down car insurance doesn’t mean you’ll simply sign on the dotted line and drive away without any money out of pocket.

As a general rule, a zero down car insurance policy spreads the cost of the entire policy across 6 or 12 months, depending on the term.

Understand that you’ll probably still have to pay the first month’s premium before the insurance policy will take effect.

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The Advantage of Zero Down Car Insurance

The only real advantage of zero down car insurance is the fact that a policy can be obtained with a very small initial payment.

This is in contrast to traditional car insurance where you pay the entire balance up front, or at least $200-$300 initially.

Having to come up with less money at the start of the policy is advantageous to those who are of limited financial means or might not have correctly budgeted for the cost of obtaining a new car.

If financial restraints make purchasing traditional insurance a stretch, things won’t change in the future unless your financial situation improves.

The Disadvantages of Zero Down Car Insurance

There are several disadvantages to purchasing zero down car insurance, not least of which is the fact that you end up actually paying more for the total policy.

You will not pay the best price on this type of car insurance.

  • Costs More – to make up for the increased risk as well as the administrative costs of having to process more payments, a zero down car insurance policy can cost up to 10 percent more than a traditional policy,, which translates to about $100 a year more. You will also likely incur monthly service charges for the privilege of making monthly payments.
  • Minimal Coverage – the minimum amount of coverage as required by law for liability, bodily injury, and property damage. If you should be in an accident which results in a lawsuit against you, it’s likely that a zero down policy may not cover the full cost of that accident.
  • No New Cars – you will not be able to obtain this policy on a new car for which a lien exists. Zero down car insurance is typically geared toward low-income drivers with lien free vehicles.

Whether you’re looking for zero down car insurance or a standard policy, typing your zip code in below lets you start searching for online car insurance quotes right away!



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