No Down Payment Car Insurance: A Guide

Car insurance companies can offer no down payment car insurance, but most don’t. If a car insurance company advertises no down payment car insurance with the first month’s premium free, it’s not necessarily on the up-and-up. Reputable insurance companies require payment to begin coverage, but whether you pay in full or installments is the question. 

Several car insurance companies only allow drivers in good standing to select monthly payments instead of the total amount upfront. If you have a low credit score, gap in insurance coverage, or drive an expensive car, insurance companies may require that you pay in full. However, car insurance companies may offer steep discounts if you pay in full. 

Learning what a car insurance premium is and what payment plans are available can help you budget. If you pay your premium in installments, many car insurance companies tack on extra fees. They may also limit what coverage options you can select from and require you to agree to a cancellation policy with a hefty fee.

Researching no down payment car insurance mirrors the steps you’d take to find an affordable insurance policy that you can pay monthly. After you’ve entered your information online or spoken to a representative over the phone, many major car insurance providers present you with two numbers. The first number is your monthly payment should you choose a monthly plan, while the second is the amount due if you pay in full. 

In most cases, car insurance companies require the first month’s payment minimum to begin coverage. You can also select to pay monthly across the policy term, twice yearly, or annually. Compare prices and determine how much you can save by choosing a payment plan that fits your budget. If you can part with the money now and save it at the back end, you may be further ahead than if you stuck to your budget in the first place. 

Even if you think you can’t afford it, asking about discounts for paying in full can help put your payments in perspective. If you can swing making your payment in full, you’ll also avoid lapses in coverage, which can often affect your car insurance rates long-term. Sometimes, getting a cost out of the way for several months can help you focus on other debts or payments. 

Why do car insurance companies require down payments?

Car insurance companies require down payments because they offer accident coverage in exchange for your premium. Your down payment validates your payment method to ensure future payments and reduces the risk associated with insuring you and your vehicle. Should you file an accident claim on your policy the day policy coverage starts, the insurance company already has funds to offset the costs associated with the accident in addition to your deductible. 

Car insurance premiums vary based on several factors, including: 

• Insurance company
• Selected coverage limits  
• Driver’s age
• Driver’s gender 
• Driving record
• State of residence 
• Vehicle details, including type, age, mileage, etc.

Car leasing with insurance often costs you more than the national average because the lessor requires a higher coverage limit than state minimum requirements. However, you can still obtain a car insurance policy with the option to pay in full upfront or distribute your payment across the policy term. Several major insurance companies commonly offer six-month and 12-month terms. 

Many car insurance companies will offer a discount of between 5% and 15% if you pay your car insurance premium in full. This discount typically doesn’t negate other discounts you may qualify for, such as a student, military, or good driver discount. Take a look at the following example of the amount you’d save if you paid your car insurance premium in full: 

       $142 per month

X    12-month policy 

=======================

$1,704 annual premium

The average national cost of car insurance for 30-year-olds is $142 monthly or $1,704 annually. If we apply a 5% discount to that number based on payment in full upon obtaining the policy, the new premium looks like this: 

$1,704 x 0.05 = $85.20 payment in full discount

$1,704 - $85.20 = $1,618.80 new premium

To determine how much you’d save if your car insurance company offered a 10% discount for paying your premium in full, simply multiply the savings above by two: 

$85.20 discount (at 5%) x 2 = $170.40 discount at 10%

$1,704 - $170.40 = $1,533.60 new premium

As you can see, paying your premium in full can save you nearly $200 on a basic policy, given the right circumstances and ability to pay. 

Major car insurance carriers such as GEICO, State Farm, Progressive, Nationwide, and USAA offer affordable car insurance premiums with a low deposit. Most deposits typically consist of the first month’s payment. However, you should compare rates between car insurance companies to see who offers the best rates for your situation. 

Be aware that some car insurance companies don’t break up the cost of car insurance equally across your policy term. Certain companies may require that you cover the cost of initializing your premium in your first month’s payment, which can increase that month’s payment compared to the remainder of the policy. Breaking up payments this way isn’t necessarily a deal-breaker, as it’s more to help you budget accordingly. 

Finding low down payment car insurance requires comparing rates based on what coverage limits you desire or need depending on your situation. If you can’t afford your car lease payments anymore, finding a lease deal with looser car insurance requirements can help you save money. Ask about discounts and offers that may reduce your car insurance premium and lower your monthly payment. 

Many wonder if you can pause your car insurance if you’re not driving or cancel it altogether. Not purchasing car insurance can save you money, but it’s required by law if you own a vehicle, even if you don’t drive it. Many car insurance companies also shy away from drivers without car insurance, as they consider them higher risk. 

If you can’t afford car insurance, subscribing to FINN can help solve the problem. FINN offers affordable car subscriptions that incorporate insurance costs into your monthly payment, which also includes depreciation, registration, and maintenance. With a FINN car subscription, you can avoid comparing rates and searching for discounts and instead focus on the road ahead. 

Can you get insurance and pay later?

You cannot get insurance and pay later, as most car insurance companies require payment before coverage begins. While you can add coverage later on, additional coverage often requires an increase in your premium, whether you pay monthly, bi-annually, or annually. You can also take advantage of insurance premiums that charge per mile, often called pay-per-mile coverage, but not all drivers qualify for or benefit from this type of car insurance. 

Saving money on car insurance requires knowing what discounts are available. Here are a few standard discounts you can typically take advantage of across car insurance companies: 

• Multi-vehicle
• Safe driver
• Military 
• Good student
• Automatic bill payment
• Paying your premium in full 
• Completion of driver classes and training programs 
• Continuous insurance
• Multi-policy or bundling

Increasing your deductible can also lower your monthly payment. If you’re unsure you need a particular type of coverage, you can inquire if adding that coverage later will incur a fee or up your premium. Improving your credit score can also help lower your car insurance premium. 

When you subscribe to a car with FINN, you don’t have to stress over credit scores or discounts. Instead, you can focus on which car best suits your lifestyle. FINN also offers trucks and electric vehicles to give you a wide selection of makes and models.