When you purchase a car insurance policy, you’re required to pay some money upfront. Usually, this is your first month’s premium. After making the initial payment, your car insurance coverage takes effect and remains in effect as long as you continue paying your monthly rate. If you stop paying the premium, your insurer will cancel your policy.
While you might see some insurance companies advertising no down payment car insurance, it’s usually too good to be true. Car insurance providers won’t issue your policy until you pay some money first. Here’s what you need to know about no down payment car insurance, including what your options are for car insurance with no down payment.
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Last updated: April 17, 2023
If you’re wondering, “Can I get car insurance with no down payment,” the short answer is no. Car insurance companies always require payment to begin your coverage, so you can’t get a car insurance policy without giving your insurance company at least some money upfront.
You might see insurance companies offering low down payment car insurance. This usually means that the insurer only requires the first month’s premium before coverage begins. However, this is standard for all car insurance policies, even if it’s not advertised as low down payment car insurance.
You typically have the option to pay your annual premium in monthly installments or pay the annual premium upfront and in full. If you pay in full, your “down payment” will be much bigger, but you don’t have to make monthly payments for the rest of the year.
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You can’t get car insurance with no money down. To explain why, we can look at how a car insurance policy is different than a loan.
With a loan, you must make a down payment first and pay off the rest of the loan over time. The down payment is a separate fee you must pay in addition to your monthly loan payments. Once the loan is paid off, you are no longer indebted to your lender.
With car insurance, your first month’s premium acts as the down payment. There is no separate payment required. You continue to pay your premiums in exchange for insurance coverage. As long as you pay the premiums, your insurer will cover you against claims that might arise.
Car insurance companies require a “down payment” as part of the insurance contract. In exchange for premiums, your insurance company agrees to cover you against insured losses, like accidents and car theft claims. Insurance companies don’t cover policyholders for free, so you must pay to get coverage through your insurer.
You aren’t required to pay for your entire car insurance policy upfront. Most car insurance companies offer different payment plans, so you can pay for your policy at the frequency that’s best for you. Many drivers pay their premiums monthly, but you might also be able to make four payments or two payments per year.
The most significant benefit to paying your annual insurance premium upfront is that you may be able to save money. Many car insurance providers offer a small discount to drivers who pay upfront and in full, rather than monthly. If you can afford to pay in full, you could get a lower premium.
You won’t be able to get a car insurance policy without making your first premium payment. However, it’s still possible to find affordable auto insurance, which will reduce the size of your down payment.
First, look for insurance companies that offer discounts you can take advantage of. Many insurers offer savings for smart students, safe drivers, taking a defensive driving course, bundling your insurance policies, insuring multiple vehicles, and insuring a vehicle with safety equipment, like collision warning systems, backup cameras, or anti-lock brakes.
It’s also important to choose your coverage carefully. Adding endorsements to your policy, like accident forgiveness, gap insurance, or roadside assistance, will cause your rate to increase. While endorsements can be beneficial for some drivers, you should only choose the coverage that you really need. If any of your policies have deductibles, picking a high deductible will lower your premium (but be sure that you would be able to comfortably afford your deductible out-of-pocket should you ever need to make a claim).
Lastly, make sure to shop around and compare rates at several different insurers. The first quote you receive might not be the cheapest. Take our short quiz to see what you can expect to pay at top car insurance companies near you.
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