When you purchase car insurance, it typically goes into effect immediately. That’s because you’ve paid some amount of money upfront. Insurance providers need to ask for a down payment as a show of good faith, to prevent people from taking out a policy to show proof of insurance and then never actually paying for the insurance.
When you get a quote for car insurance, you’re usually given payment options, which can be monthly, semi-annually, or annually (you’ll usually get discounts if you pay for a year all at once). But you’ll generally need to pay an amount upfront, and that’s usually considered a down payment. Keep in mind that the down payment is not an amount separate from your premiums; everything you pay in a down payment gets applied to your premiums.
A down payment can be one month of premiums or several months of premiums upfront, depending on the insurance provider. This can often be difficult for many to come up with immediately, especially if you need car insurance quickly.
So, what are your options?
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It’s worthwhile to note that it’s very difficult to get car insurance without down payment. Most insurance providers need money upfront in order to issue you coverage. But there are some ways around this.
Some insurance providers will accept your first month’s premium as your down payment. This means that you’ll only need to come up with a payment of one month in order to get cheap full coverage auto insurance with no down payment. This is often marketed as no money down auto insurance, but of course, you’re still putting the first payment down.
Some insurance providers offer heavily discounted down payments, also known as low down payment auto insurance, at less than a month’s premium in order to attract clients. Make sure that your monthly premiums don’t get bumped up to cover this discount.
It can’t be over-emphasized that reputable insurance providers don’t offer coverage for free. If you’re getting an offer like this, make sure to read the fine print and double-check the credibility/reputation of the insurance company.
Insurance providers need some money upfront to protect themselves in case you immediately get into an accident once covered. That money can be called a down payment or monthly premiums paid upfront, but you will need to at least pay for one month of premiums before coverage can start.
If you’re offered a discounted down payment, or you choose to pay monthly premiums versus 6 months to a year upfront, you’ll want to keep a close eye on your premiums. Insurance companies prefer that you pay for a year upfront and will offer you discounts to do so, but if you choose to pay monthly, they may hike your monthly premiums to compensate for the added risk on their part.
Car insurance with no down payment can sometimes be tricky to find, but there are some people that won’t qualify for it regardless. If you have a poor driving history (especially if you’ve had to file an SR-22 form), if you have bad credit, or if you own an expensive, newer car, you’ll find it difficult to qualify for no or low down payment auto insurance.
If that’s the case, you do have alternatives in order to save on car insurance, which we’ll dive into next.
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Auto insurance without a down payment is technically possible to find, but keep in mind that you’ll be required to pay some money upfront to activate the policy and coverage. Be wary of any insurance provider that somehow gives you cheap full coverage auto insurance with no down payment without paying a cent, as it may not be legitimate.
If you’re looking to save money on car insurance, skipping the down payment might not be your best bet: try other methods like bundling insurance policies, improving your driver history, and raising your deductible.
At the end of the day, car insurance is required by law in most states to drive a vehicle, so for some, zero down payment car insurance is the best option to get the coverage they need right away.
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No down payment auto insurance sounds ideal, especially if you need car insurance fast. But it’s a little too good to be true: there are definitely insurance providers that will allow you to skip a traditional down payment, but you’re still going to have to pay at least one month upfront in order to secure coverage.
Be wary of any insurance providers that promise instant car insurance coverage without any payment upfront. Having car insurance is critical if you’re going to be driving, but you need coverage you can trust. If a down payment is going to be tough to swing, try to find an insurance quote that allows you to pay just one month upfront to make it more affordable, and compare quotes to make sure you’re getting the best deal possible.
If you’re not required to pay a down payment, then your costs will likely be at least one month’s worth of premiums to get insurance. Your premiums will depend on a variety of factors, including your vehicle, your driving history, your age, and more.
Not necessarily. In the long run, paying week by week is more expensive than a plan that lasts a year. However, weekly insurance prices are quite competitive. If you only need insurance for a week or two, shopping around can provide a great deal.
Hollay Ghadery Hollay Ghadery is a writer and editor who is passionate about financial literacy as a means to personal fulfillment. Hollay has over 18 years of experience creating content about a range of topics related to personal finance, including insurance, investing, banking, and credit cards. When Hollay isn't writing, she's spending time with her four children, two dogs, and three goats.
