Can you get car insurance with no down payment?

What is no down payment car insurance?

In theory, no down payment car insurance is a type of auto insurance policy that does not require money up front. Once you pay the first month’s premium of insurance costs, your coverage will start.

However, the term no down payment car insurance is somewhat misleading. Insurance companies do not have car insurance with zero down expenses or sell policies labeled “no down payment.” You will need to pay at least the first installment of monthly payments — in itself a kind of down payment — before your policy can become active.

How to get no down payment car insurance

No down payment car insurance is not something that you can get. Why do you have to pay a down payment for car insurance? In short, the insurance company doesn’t want to insure your car for free and then have to pay out if you get into an accident right away.

Instead, focus on shopping around for affordable coverage, looking into savings opportunities like discounts and making sure you're not paying for coverage you don't need. Experts recommend speaking with a licensed insurance professional for individualized guidance.

How no down payment auto insurance works

While there is technically no such thing as no down payment auto insurance, you can eliminate a huge initial cost by paying on a monthly basis. For example, if your annual policy costs $800, you would pay around $66 in monthly payments. This is a good option for drivers who want affordable car insurance and cannot afford to pay more than the monthly rate at one time. You must pay the minimum monthly rate throughout the policy period to keep your auto insurance policy in effect.

Keep in mind that if you need auto insurance coverage effective November 30 but get a quote earlier in the month, you usually have until November 30 to pay to bind the policy. If you don’t pay at least the first monthly payment by November 30, though, coverage may not be in force if you get into an accident.

What are my options for car insurance payments?

Drivers typically have a couple of car insurance payment options: monthly or annually. While most car insurance companies will issue a car insurance policy on an annual basis, many drivers will opt to break the yearly cost into monthly payments instead. Paying your annual car insurance premium in monthly installments is a convenient option for those on a budget, though it may cost a little more in the long run due to processing and billing fees.

However, paying for a car insurance policy in full up front may actually be the most cost-effective option if your insurer offers a discount for paying in full. Many car insurance companies offer this type of discount, and you may also be able to cut out any processing or extra billing fees by doing so. Some car insurance companies will also offer six-month policies that can be paid up front, often in return for a paid-in-full discount.

How much is no down payment car insurance?

Even without the possibility of no down payment car insurance, it is possible to find cheap coverage, although the price you pay depends on a number of factors. Your insurer will look at your car's age, make and model, as well as personal details such as where you live, your credit rating and your driving history. The department of motor vehicles in each state keeps a record of past infractions, such as tickets or accidents, and you are likely to pay more for your policy if you have anything less than a clean record.

To note, the average cost of car insurance in the U.S. is $2,314 per year for full coverage and $644 per year for minimum coverage, according to April 2024 data from Quadrant Information Services. If you choose a monthly payment option, this comes out to $193 per month for full coverage and $54 per month for minimum coverage. Your own rate, however, is likely to differ from the averages and may be higher or lower.

Learn more: Cheapest car insurance companies in 2024

How to save on car insurance

Drivers who are looking for affordable car insurance with no money up front will be disappointed. An auto insurance policy requires payment, even if it’s the first installment of monthly payments. Insurance costs vary, but here are a few ways you can save on auto insurance coverage:

Improve your credit score

Your credit score has a significant impact on your car insurance costs in most states. The better your credit-based insurance score, the cheaper your monthly payments and the initial upfront payment will typically be. Improving your credit score can help you get affordable car insurance with minimum money up front.

Participate in a telematics program

Most car insurance companies offer telematics programs that can help you get a reduced car insurance premium based on how safely and how often you drive. The program typically uses an app or device to track your driving. Once the insurance company has collected data about your driving for a specific period, they may offer you a discount on your premium. Some car insurance companies only use telematics to give discounts, but others may penalize you if you exhibit unsafe driving habits.

Raise your deductible

If you can afford to increase your deductible, you are likely to pay less for your policy. Note, however, that you will need to pay your deductible if you file a relevant claim, like a collision claim, so be careful to only increase it to an amount that you would be comfortable paying out of pocket.

What should I do if I can’t afford car insurance right now?

If you can’t afford car insurance right now, there are some steps you can take to make it more affordable over time. These include:

• Compare insurance quotes: One of the best ways to save money on your car insurance policy is to compare quotes from multiple providers.
• Reduce your coverage: If you have more coverage than required by your state, lender or financial institution and can’t afford your current car insurance policy, you may be able to reduce or cut out certain types of optional coverage to make the policy more affordable.
• Look into assistance programs: Certain states provide assistance programs for drivers who can’t afford car insurance. These programs are typically reserved for low-income drivers. If you’re low income and live in a state with an assistance program, it may be worth exploring.
• Purchase a pay-per-mile policy: If you drive less than a certain number of miles per week, you may be able to get a pay-per-mile policy. In some cases, you may be required to install a telematics device in your car, but you’ll typically pay a base rate plus a per-mile fee, which may lower the cost of your policy.
• Improve your credit: Your credit history factors into your car insurance premium in most states. Improving your score could make your car insurance policy more affordable over time.
• Purchase minimum coverage: Most states legally require drivers to have car insurance. If you can’t afford car insurance right now but own your car outright, you may want to consider purchasing the lowest level of coverage required by the state.
• Use alternative transportation options: It may also be worth looking into alternative transportation options, such as public transportation, rideshare services and carpooling.

Frequently asked questions