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Sifting through providers and policies can be confusing, especially when you see terms like “no deposit car insurance” being bandied about.
Car insurance is a legal contract — and the truth is, you’ll always need to pay something upfront. When you see ‘no down payment,’ it just means you won’t be paying more than the first month’s coverage for your policy to take effect.
Yes, and here’s how it works: When you purchase a car insurance policy, you have the option to pay in full or in installments. Paying in installments allows for you to split the cost of your coverage across 12 monthly payments. The first payment is sometimes more expensive if it includes the deposit or down payment. The word “deposit” is misleading too, as you won’t get it back when your term ends.
Typically, drivers with clean driving records and high credit scores can qualify for low-deposit insurance. Often, the deposit is as little as a few dollars and it helps to cover the admin costs that come with taking on a new customer.
Either way, you’ll always need to pay something to secure coverage. Once you pay the first month’s premium, your policy starts.
Pay only for the miles you drive, plus enjoy app services you won’t find everywhere like claims and car health updates.
If you want to lower your upfront payment, you have three options:
When you look up “no-deposit car insurance”, you’ll see a bunch of third party insurance agencies pop up. Question the validity and integrity of these sites — the fact is that no reputable insurance provider issues a policy without some payment up front.
Insurance is a game of risk. From an insurer’s point of view, someone who doesn’t want to pay a deposit is probably only purchasing a policy to either satisfy a car dealership’s requirements or trying to avoid registration penalties. And chances are, they’ll cancel their coverage soon.
If these situations apply to you, you may have a harder time finding coverage with a low down payment:
Insurers deem these situations risky, so they compensate for that risk by charging a higher rate. If your credit, driving record or license suspension is making it difficult for you to get coverage, it’s worth looking into car insurance for high-risk drivers. Otherwise, you may have to make a larger down payment or pay for your policy in full.
Searching for the cheapest possible coverage? These strategies help you to save on your insurance.
It depends on your driving profile and budget. While monthly payments can make paying for a policy more manageable, that convenience comes at a cost. Since it takes more time to process 12 payments instead of one, most insurers charge an installment fee, which can be up to $10 per month. If you can afford to pay upfront, you’ll typically save 5% to 10% on your insurance.
If you have good credit and a strong driving history, or if you drive an older or less expensive car, you can probably buy a policy with a low deposit. On the other hand, if you have poor credit or blemishes on your driving record, you may face a higher upfront payment.
The application process to buy car insurance is basically the same for all payment options. First, you’ll get a quote, then you’ll fill out the application. The difference comes when you get to the payment page, where you’ll be able to opt into paying in monthly instalments.
No-deposit insurance doesn’t exist, and for good reason. Insurers use down payments to cover onboarding costs and to make sure you’re not going to cancel your coverage right away. However, low deposit insurance is a thing, and you can often find it if you’re a good driver with a good credit history.
There are other ways to save, like looking for discounts and only paying for the coverage you need. To score the best rate, be sure to compare car insurance quotes.
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