What Is No Down Payment Car Insurance?

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When purchasing an auto insurance policy, you typically have the option to pay either in lump-sum installments or monthly premiums. Drivers who can afford to pay a large lump sum down at the beginning of the policy will save money on the total cost of their policy. Those who purchase car insurance with no money down will establish coverage immediately for a much lower initial price, but they'll pay more over the life of the policy.

What Is No Down Payment Car Insurance?

No down payment car insurance is an auto insurance policy that requires only the first month's premium in order to initiate your policy's term. You can pay your car insurance premiums in one of two ways:

  • Through large annual, semi-annual or quarterly payments
  • Through a monthly payment plan

While companies may advertise cheap car insurance with no down payment, you shouldn't be misled into believing you can obtain insurance without paying any money upfront. "No down payment" simply implies that you won't be paying for more than the first month of coverage to obtain insurance.

Though a monthly payment plan may work best for your financial situation, it's important to remember that this is the more expensive option over the length of the policy. Those who can afford to pay for more of their insurance policy upfront will enjoy a lower total policy price, with the highest savings going to those who pay for the entire policy in one installment.

For example, we obtained a GEICO quote for six-month insurance policy. Here is the price difference our driver would see if he chose to pay for the full six months at once instead of making monthly payments:

Down PaymentMonthly Premium (x5)Total CostSavings
Monthly$124.47$129.47$771.82
Lump-sum$746.80$0$746.80$25.02

This policy covers a 30-year-old male driving a 2010 Toyota Camry in Florida. Our driver elected:

  • $25,000/$50,000/$25,000 liability insurance
  • $10,000 of PIP coverage with a $1,000 deductible
  • Comprehensive coverage with a $500 deductible
  • Collision coverage with a $500 deductible

The savings you would see would depend on your credit and driving history, your zip code, the car you're insuring, the length of your policy, and the installment plan you choose. However, it is not unusual for drivers to save 5%–10% on a one-year policy if they pay the premiums upfront.

Who Can Buy Car Insurance with No Money Down?

Most auto insurance companies provide multiple options for payment plans. If they don't advertise the installment plan you're looking for, ask your agent if such an option exists. However, not all drivers will be able to obtain car insurance with no down payment. Insurance companies take on the risk of insuring you and your vehicle as soon as your policy begins. Because of this, they want to recuperate at least some of that risk with your initial payment.

Owners of newer, more expensive cars may have a harder time finding low down payment insurance, since their vehicles present increased risk to their insurer. Additionally, drivers with a poor credit history, or those who are required to file an SR-22, will be required to pay more of their total premium up front. On the other hand, if your car is older and less expensive to insure, your insurance provider might offer a zero down payment option.

States Where No Down Payment Car Insurance Is Available

No down payment car insurance is not available in every state. States that do allow you to purchase auto insurance coverage with little to no money down include:

  • Arizona
  • California
  • Florida
  • Georgia
  • New York
  • Oklahoma
  • Washington

Where Can I Find The Best Cheap Car Insurance

Regardless of whether no down payment auto insurance is available in your state, you'll find the best car insurance rates by comparing prices from a few different car insurance companies.

Other factors that will affect your premiums include your policy's limits and deductibles, as well as optional coverages you add, such as uninsured motorist insurance or collision and comprehensive (often called full coverage) insurance. You should get an online quote from at least three different car insurance companies in order to find the best rates.

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