Car insurance covers the cost of repairs to the vehicle and your medical expenses if needed in the event of an accident, but how do you get it if you are on a strict budget? If money is tight and you are on the hunt for very cheap car insurance with no deposit, you can find some options, but it comes with a catch. Take a look at what you need to know before you get it.
What Is Cheap Car Insurance With No Deposit?
There is a difference between very cheap car insurance with no deposit for a long-term policy and a temporary one to cover a vehicle for a short period of time. When a car insurance company provides insurance without a deposit, it means that they are taking on all the risk until you pay. Since most companies don’t take on this type of risk, they offer a way to get a policy without a large initial payment.
How Does Car Insurance Without A Deposit Work?
When you get an auto insurance policy, depending on the company, you have the choice to pay the premiums:
- Monthly
- Quarterly
- Semi-annually
- Annually
Not all companies offer all of these options, but a no-deposit policy is one that allows you to pay monthly. The term no deposit can be misleading because you don’t really have coverage until you pay the first premium, but the monthly option allows drivers to get insured without putting down a huge sum of money.
In some cases, the first payment is higher than the rest of the payments. The additional fees at the beginning of the policy are called different things depending on the company, but they often include onboarding fees to cover expenses, such as a driving history report, the initial underwriting, and administrative tasks. Some companies also charge an extra fee that’s applied to future payments to encourage drivers to keep their policy from lapsing in the future or to cover the risk of nonpayment.
Why Do Insurance Companies Require Down Payments?
Some insurance companies will charge insureds an initial down payment to prevent people from taking out a policy just to show proof of insurance, and they don’t pay any premium and let the policy lapse. Other companies let the first month’s premium payment serve as a deposit, but they don’t charge anything extra to put the policy in force.
If you are on a tight budget, Progressive is a good company to consider. Depending on the risk, they might require a smaller first month’s premium to help you get the policy put in force, and then raise the rest of the monthly premiums to make up the difference.
What Is the Cheapest Car Insurance With No Down Payment?
If you need to save even more money, you can sometimes get even cheaper insurance if you get liability-only coverage. This type of policy covers damage to other vehicles if you cause an accident, as well as their medical expenses, but it doesn’t cover your own vehicle. In most states, liability coverage is required for all vehicles, but other coverage, known as full coverage, is only needed if you have financed the car.
It’s important to consider the financial impact of not having complete coverage on your car before making this decision. If it’s an older model and you can cover the cost of repairs or the cost to get into a new vehicle if needed, then liability-only is a good option.
How To Find Cheap Car Insurance With No Deposit
The best way to find very cheap car insurance with no deposit is to shop around. You can get quotes from multiple companies just by providing some personal information and details about your vehicle. Some of the information you should prepare to provide include:
- Information about the vehicle. All insurers will need to know the make, model, and year of the car you want to insure. They will also ask about the color and the mileage.
- Your personal information. You’ll have to provide your full name, age, job status, marital status, and your driving history, so the company can assess you as a risk.
- Your credit score. You’ll have to provide consent for the insurance company to access your credit history. Keep in mind that a good credit score will help keep your premium payments lower.
Another way to find cheaper car insurance rates is to look for discounts. Every insurance company offers discounts for clean driving records, high credit scores, and cars that have safety features. You can also get discounts for carrying multiple insurance policies with the same company and signing up for paperless billing.
Before deciding on a company, compare the coverage you can get with each and the premiums they will charge. Make sure you compare the identical coverage amounts between policies and look at what each one requires to get a policy put in force.
Who Can Qualify for Very Cheap Car Insurance With No Deposit?
Not every driver will qualify for an insurance policy without a deposit. Insurance companies consider their risk when issuing policies, and a low-risk driver will be able to get lower premiums and get a policy with a lower deposit or no deposit. The amount you’ll have to spend to get your policy put in force depends on the same factors that the insurance companies use to determine your rates.
A high-risk driver with poor credit will have to pay anywhere from just a few extra dollars a month to up to 30% more than a low-risk driver.
Be Wary of Zero-Down Insurance Offers
Avoid companies offering zero-down coverage since there is really no such thing. They might just be trying to get your personal information. You should also be wary of a company that asks you to pay for quotes. Reputable insurance companies will provide you with a quote for free.
Very cheap car insurance with no deposit will still require a first month’s payment. You can find other ways to reduce your out-of-pocket expenses and reduce your car insurance bill. Just make sure to do your research.
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.
