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Finding Auto Insurance With Cheap or Zero Down Payment

cheap down payment auto insurance

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Some car insurance companies may require you to pay a certain amount of money before you can enjoy the protection and coverage of an insurance plan. However, there is some misleading information out there about down payments that you must pay to sign up for car insurance. Use this guide to help you find a car insurance rate that you and your bank account can agree with.

What Are Down Payments or Deposits for Car Insurance?

If you find a car insurance company that requires a down payment, you may want to reconsider signing up for a plan with them. That’s not how the process goes, though you may run across a company that works this way. What people consider to be the “down payment” or “deposit” of signing up for an insurance plan is generally just a portion of the premium for the plan. In other words, you don’t get the protection you’re shopping for until you pay for it.

Some companies will market their plans with the promise that you won’t have to pay a down payment. This is a misleading statement, as most car insurance companies won’t ask you to pay a down payment. But you’ll have to pay something regardless.

You’re not going to find a car insurance plan that gives you coverage with no initial charge. At least, not through a reputable company. You’ll generally have to pay some amount to start your coverage.

Your best-case scenario is that you’ll find a policy that only requires the first month’s payment for your plan to go into effect. In this sense, finding a plan with the lowest monthly payments is the best way to reduce the cost of signing up for insurance.

If you can pay a larger premium up front (paying for multiple months at a time), you can effectively reduce the cost of your insurance over time. Generally, people who pay for their car insurance on a monthly basis will end up paying more for their car insurance than someone who pays for their plan on a yearly basis. But if you need to save money now rather than later, you can also start off by purchasing a month at a time until you’re more comfortable with purchasing multiple months in one payment.

Which States Allow No Money Down on Insurance?

Whether or not you can find an insurance plan that doesn’t have any initial payments depends on the state where you live. Only certain states allow you to pay no deposit or a cheap down payment on auto insurance. Those states include:

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

If you live in any of these states, you may be able to save even more money when you sign up for car insurance. However, whether or not you have to pay a down payment is ultimately up to the car insurance company.

Who Has the Cheapest Insurance?

Finding the cheapest car insurance for you and your situation can take some research and reaching out to multiple insurance companies. If you’re looking for the companies that offer the cheapest car insurance in the United States on average, here are some companies to look into first, according to ValuePenguin. The rates shown are the monthly payments for minimum required coverage plans.

  • USAA: $36
  • Farm Bureau Insurance: $39
  • Auto-Owners Insurance: $40
  • Erie: $42
  • State Farm: $44
  • American Family: $53
  • GEICO: $56
  • Progressive: $74
  • Shelter: $74
  • Allstate: $76

USAA is reserved only for military members, veterans, and their immediate families. The national average for liability-only car insurance is $785 per year or $65 per month.

How To Make Your Car Insurance Payments Cheaper

Though the national average for liability car insurance may be around $60 per month, your particular situation may put you somewhere higher or lower than that average. That’s because there are many factors that car insurance companies take a look at when they decide how much they are going to charge you for your policies.

Pay Monthly if You Must

If you’re concerned about down payments because you want to pay the least amount you can as soon as possible, then there are a few tactics you can use. Paying for insurance one month at a time can allow you to pay less now. However, this tactic can end up costing more over time than if you had paid for six or 12 months up front.

Raise Your Deductible

Those looking to save money now and simply get their vehicle street-legal should raise their deductible as high as it will go. A plan’s deductible is the amount you pay after a collision before your insurance kicks in. For instance, if you have a $1,000 deductible on a $20,000 bodily injury liability plan, you would pay the $1,000 before your insurance plan covers up to $19,000 above that amount. Typically, the higher your deductible, the less your insurance will cost you.

Ask About Discounts

Once you find a car insurance company that offers a cheap plan that you like, be sure to ask about any discounts you might be eligible for before you agree on the final payment amount. These discounts come in all shapes and sizes. You may be able to pay less for your military status, being a student, having a safe driving record, taking a defensive driving class, and more.

Shop Around

Don’t accept the first insurance plan that seems to fit the mold of what you’re looking for. Get quotes from multiple companies and compare them to make sure you’re making the best decision for you and your needs.

Your main takeaway from this article should be that “down payments” are not something you should be worried about when you’re shopping for car insurance. Paying as much of your premium as you can is an effective way of lowering your insurance costs, but there are some other tricks you can take advantage of if you’re looking to save money on your coverage.

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

We’re here to help you simplify car care and save, so this post may contain affiliate links to help you do just that. If you click on a link and take action, we may earn a commission. However, the analysis and opinions expressed are our own.


About the Author

FIXD Research Team

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

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