Automobile

No Money Down Car Insurance: Everything You Need to Know

While no money down car insurance might afford you lower costs initially, you typically end up paying more over the life of the policy. Only several states and insurance companies offer this type of insurance, and you must fulfill certain requirements before you’re approved.

What Is No Money Down Car Insurance?

Also known as no down payment car insurance, no money down car insurance means you aren’t required to give an upfront deposit. As long as you pay the first month’s premium, your coverage begins.

However, it’s important to know that some insurers don’t sell coverage for free or offer ones labeled as no down payment. You need to pay at least the first month’s premium, which almost acts like a down payment before your policy can begin.

The simple reason is that insurers don’t want to take the risk of insuring you if you haven’t submitted any payments. They view a client who can’t make a down payment as someone who only wants the insurance so they can drive home in it after getting it registered. They believe the client may cancel the policy after a short time, which makes them a higher risk.

The down payment on your policy is usually just the first month’s payment. This initial down payment covers onboarding costs associated with new clients, such as running a full driving report and other administrative fees.

Getting a low down payment is usually contingent upon getting a decent rate from your insurer. Also, if you have a newer, more expensive vehicle, you might have a more difficult time finding low down payment insurance since your vehicle has an increased risk to the insurer. However, if your vehicle is older and less expensive to insure, your insurer might offer a zero down payment option.

Keep in mind that no down money down car insurance isn’t available in every state. According to ValuePenguin, the ones that do allow it include the following:

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

    What Companies Offer No Money Down Car Insurance?

    Not every insurer offers no money down auto insurance, so it takes some searching to find ones that work for your budget and needs. Some companies that offer no down payment insurance include the following:

    • Allstate
    • American Family
    • Auto-Owners Insurance
    • Erie
    • Farm Bureau Insurance
    • Farmers
    • Metropolitan
    • Nationwide
    • Travelers
    • USAA

      The overall cost of no money down insurance is typically more expensive compared to regular coverage. You might think you’re saving money by selecting the no money down option, but it’s the opposite. The more money you can pay initially, the lower your premium will be.

      An insurer might give you the cheapest car insurance with no down payment by waiving the down payment and applying it to your first month’s payment. This is perfect for those strapped for cash, but they still must pay administrative processing fees to open the policy and are responsible for all monthly payments.

      To learn exactly how the process works, take this example into account. An insurer might quote $400 for an annual insurance rate if paid in full. Or, they can offer no down payment insurance for $45 monthly. Paying month-to-month will cost $540 total for the year, which is $140 higher than if paid in full.

      If you’d rather have more flexibility, the following insurers offer flexible payment options, allowing you to make monthly payments:

      • State Farm. This company bundles all of your policies into one bill, allows you to select your payment due date, and has a convenient mobile app.
      • GEICO. This company lets you make payment installments, gives military discounts, and has customer service available 24/7.
      • Progressive. This company bundles auto with property insurance, provides monthly payment options, and has a Name Your Price tool to let you name the price and it will show coverage options.

        Depending on the individual policy and state, the typical down payment for car insurance could equal two months of coverage. According to BuyAutoInsurance.com, down payments are typically estimated at around 20 to 33 percent of a six-month total.

        Note that the down payment isn’t a deposit but rather part of your premium. It’s built into the rate, so it’s deducted from future monthly payments. The larger the down payment you initially make, the lower your premium will cost on a per-month basis.

        How Can You Save on No Money Down Car Insurance?

        If you’re looking for ways to save money with no money down car insurance, consider the following:

        • Improve your credit score. Usually, drivers can only receive no down payment insurance if they fulfill specific credit requirements. Improving your score can allow you to obtain cheap car insurance without a deposit. This might take time, but keeping your balances low and managing credit wisely can help you save money on insurance as insurers view those with good credit as a lower risk compared to those with poor credit.
        • Take a driver safety course. Completing approved courses can help you lower your insurance premium as this class teaches you how to be a safer driver. This means you might be less likely to get into an accident, making you a lower risk for your insurer.
        • Increase your deductible. Raising your deductible can lower your monthly premium. Make sure you can afford the increased rate beforehand, especially if you will need to file a claim. According to MoneyGeek, raising your deductible from $200 to $500 could save you between 15 to 30 percent.
        • Inquire about discounts. Your insurer might offer discounts based on your profession, bundling your policies, having several vehicles, or having good students in your household.
        • Ask for automated payments. Some insurers charge less if you set up automatic monthly billing payments.
        • Look into the extras. Certain insurers offer incentives to drivers, such as an in-car device to track your driving and potentially lower your rates.

          Although no money down car insurance isn’t as easy as securing regular coverage, it might be worth it depending on your situation. Make sure your state offers this type of insurance, you fulfill certain requirements, and obtain quotes from several companies to make sure you’re getting the best rates.

          Sources:

          Cheap No Down Payment Car Insurance

          AFFORDABLE NO DOWN PAYMENT AUTO INSURANCE

          How to Get Cheap Car Insurance With No Deposit or No Down Payment

          Progressive Auto Insurance: Everything You Need to Know

          How Often Do You Pay Car Insurance?

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