Purchasing no down payment car insurance seems like the perfect plan, especially when you can’t afford a substantial out-of-pocket expense upfront. However, looks can be deceiving. Below, you’ll learn the truth about no down payment car insurance.
Here’s the thing. No down payment car insurance isn’t an actual thing, meaning it’ll be next to impossible to find this type of policy. Why? A traditional down payment isn’t associated with that kind of policy. Instead, when insurers use the term “no down payment,” they mean something entirely different. No, you aren’t able to avoid paying anything to get your policy started. It’s the opposite. You’ll pay your full policy, either 6- or 12-months, in one payment. This is opposed to making smaller monthly payments.
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There is a Plus Side to Making this Large “Down Payment” Upfront
You’ll be eligible for a bulk buy discount, which can save you a considerable amount of money. If you don’t have the cash lying around to pay your policy in full, you’ll have the option of making monthly payments. Instead of paying the “larger down payment,” that is the amount of your policy in full, you’ll pay a “smaller down payment,” which tends to be a single month’s coverage. In either case, you’ll have to pay something out of pocket to ensure your policy goes into effect.
Why Can’t You Get Cheap No Down Payment Car Insurance?
There’s a straightforward reason you must pay money down to get your car insurance started. Insurance companies view zero-down payment policies as a substantial financial risk. As a result, they don’t even offer it as an option for buyers.
So, now that you know the truth about no down payment car insurance, there’s just one question left to answer: How can you find affordable coverage that doesn’t break the bank? Fortunately, you’re in luck. There are several options available.
Very Cheap Car insurance for $20 Down
Some insurers will allow you to pay a small down payment, often as little as $20 to $40, as a sign of good faith. However, not everyone qualifies for this. In addition to having good credit, you’ll need a history of consistent car insurance coverage. If you’ve had a policy canceled in the past, companies view this as a red flag. Why? It often signifies that you have committed a significant violation in the past, drastically increasing your risk and causing your insurer to void the policy. This could be related to past DUIS or convictions for reckless driving.
If you are required to file an SR22, you can anticipate having to pay as much as 10% or more of the total premium to get your policy started. On the other hand, if you’re a good driver with continuous insurance coverage, you are likely to qualify for very cheap car insurance for as little as $20 down.
Car Insurance Down Payments
You won’t be able to find a car insurance company that offers no down payment coverage. You have to put money down to activate your policy. If you’re lucky, you’ll find a company that will allow you to put down a small good-faith payment. However, you’ll be expected to pay the first month’s fee in most cases.
Below, you’ll find our comparison of the Seattle area’s top three insurance companies. Here you’ll see the average savings you can expect when paying your 6-month policy in total upfront. The plan was estimated for a 30-year-old female driver of a 2015 Honda Accord for the most accurate result. For a woman who drives her car around the Seattle metro area and averages fewer than 10,000 miles yearly.
Her coverage includes:
- The minimum coverage allowed in Washington State, which is:
- $10,000 PIP coverage
- Comprehensive coverage with a $500 deductible
- Collision coverage with a $500 deductible.
If she chooses to pay the full six-month policy in full, she’ll save around $52.99 or an average of 6.13%. With that being said, this ‘s only the average for these three insurance companies.
Depending on the company chosen, savings will vary. For example, we discovered that one company offered an average savings of 17.6% when the entire policy was paid upfront, while another offered no savings. This is why it is so important to shop around and compare car insurance companies before selecting a policy.
Average Car Insurance Costs in the US
According to a well-known comparison site, Young America Insurance, the average cost of insuring a car is around $713 annually in the United States. Of course, this is only an estimate because so many things must be considered when determining a rate. These factors include:
- Your driving history
- Your credit history
- Your gender
- Your marital status
- Your age
- Where you live and where you drive
- The type of vehicle and its value
If you own a more expensive car, you’ll pay more for your auto insurance. You’ll live in a highly congested area, such as Las Vegas or NYC.
Finding the Cheapest Car Insurance Companies
So, pay more for your car insurance. When you want to keep your insurance costs as low as possible, you must consider the company you choose. Below are some of the top car insurance companies, along with the monthly rate you can expect to pay for their car insurance.
Young America Insurance Services provided this data, including rates based on a 35-year-old male driving a 2015 Toyota Camry. The driver has good credit, a clean driving history, and puts less than 10,000 miles of the vehicle annually. The liability coverage meets the state minimum liability coverage in 10 states. According to the data, Young American offers the cheapest insurance if you are planning to make monthly payments.
On the opposite end, Allstate has the most expensive monthly rate. It’s important to remember that this may not be an accurate reflection, depending on your specific factors. Some insurers will let you select multiple options. This will affect your monthly rate.
Savings depend on a variety of factors, including:
- Your credit scores
- Your driving history
- Your location
- The type of vehicle you drive
- The type of coverage you select
If you opt to pay the full premium upfront, you can expect to pay anywhere from 5-10% less than you would if you chose to make monthly payments.
Other ways to save money on car insurance include:
- Taking and passing a defensive driving class
- Maintaining an excellent credit rating
- Maintaining good grades to take advantage of good student discounts
- Looking for other discounts, you may qualify for
- Comparing car insurance quotes from multiple companies before making a decision
- Investing in a car with numerous safety features, such as an anti-theft device and GPS
- Bundling your various kinds of insurance with the same company
Saving Money on Your Car Insurance Once Again The best way to save money on your car insurance is by maintaining a stellar driving record and credit history. Stay out of accidents, avoid speeding, and don’t drink and drive. You will have less control over other important factors, such as age, marital status, and location. Another way to afford your auto insurance costs is to purchase only the state’s minimum insurance coverage.
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